Re: So what would happen if AIG was forcedinto bankrupsy (pre-planed)

[David Farber <dave () farber net>]

Begin forwarded message:

From: Seth <sethb () panix com>
Date: March 18, 2009 10:23:44 AM EDT
To: dave () farber net
Subject: Re: [IP] Re:   So what would happen if AIG was forcedinto  
bankrupsy (pre-planed)

Lars Poulsen <lars () beagle-ears com> wrote:

> I think an argument can be made that when congress passed a law
> imposing caps on executive compensation in companies that
> henceforward received "extraordinary assistance", and AIG
> subsequently received such assistance, these compensation agreements
> became nullified to the extent that they would lead to compensation
> above the cap.

The Constitution prohibits laws impairing contracts (possibly only by
states, though).  However, it doesn't prohibit raising the Income Tax
rate to 99.999% on income paid by an assistance-receiving corporation
that pays anyone over $500,000, that applies to all such income over
$400,000 (yes, I deliberately made the second number lower, so that
anybody who receives such income ends up noticeably worse off after
tax).

I would have no issue with AIG (and other such corporations) "paying"
the excess compensation in a deferred arrangement, which can't be paid
out until one year after the government has no money at risk in the
corporation (or at least, all of its expenditures have been
repaid/recaptured).

Seth




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