Not Quite Parallels
From afar, I’ve followed the saga of “Fred the Shred”’s astronomical pension from Royal Bank of Scotland via online news and The News Quiz. For anyone who isn’t familiar with it, Sir Fred Goodwin, the former head of the bank and the man who steered it to the brink of collapse before it was bailed out with public funds, has ‘retired early’ and is receiving a pension of £703,000 a year. Forever. After only having worked there for ten years. As someone remarked on the News Quiz - they’re basically paying him not to go to work, because he’s only fifty, so he could easily wreck two or three more banks if he worked at it.
Inevitably, the whole situation has provoked tabloid outrage, but for once, this seems to be both justified and actually in line with what the public think. The government is apparently trying to find a way to recoup the money. Sir Fred, meanwhile, appears not to be rushing to say “No no, I couldn’t possibly take all that money after I almost destroyed the bank”.
Here in the US, the almost-parallel is insurance giant AIG, which was bailed out with a fortune of public money and then proceeded to give large amounts of it ($165million in fact) in bonuses to its staff, including members of the division that almost brought disaster down upon it. Tabloid and public outrage has duly followed, and no one is very happy (though in this instance some recipients of the bonuses are reported to be giving them back).
The BIG difference, however, is that moving with surprising speed, the full weight of the government has been applied, and this morning a new law was passed introducing a 90% tax rate on bonus payments to employees of companies which have received a certain level of bail out if their family income is above a certain level. It’s a fat cats tax, basically, and with local and state taxes expected to take the remaining 10% it’s designed very explicitly to stop them getting any fatter at the taxpayers’ expense.
Perhaps the British government should take note and find it within their collective wit to frame an “over my dead body” law designed to address this situation and any others that result in similarly inequitable situations. It obviously doesn’t seem fair to suggest a law that’s specifically designed to target one individual, but at the same time, it’s our money now supporting the bank, and maybe actually asserting some authority over the situation would do the government a world of good.
March 19th, 2009 at 4:52 pm
Note: the House has passed a bill, it has not yet passed the Senate or been signed into law.
Me, I’m not so sure that such a tax would be legal, but I’m sure that will be hashed out in the courts if the bill does become law. I’m also generally not a fan of bills moving so quickly through Congress that there is no time for due diligence (as with some of the stimulus packages).
March 19th, 2009 at 4:54 pm
And because I would be remiss if I didn’t: http://www.youtube.com/watch?v=mEJL2Uuv-oQ
March 20th, 2009 at 11:32 am
I love that you keep me on the straight and narrow.
I’m still liking that compared to the UK and the hand wringing and whining from on high, there’s at least a semblance of action here, even if it all ends up being a bit hollow :-)