I’m ALL in favor of “financial imcompetance” excess bonus taxes, of up to 90% on all bonuses over the last 10 years over 100* last year’s median taxpayer reported income (around $40k? so over $4 mil.), starting at 10% on bonuses over $400k (10* median; also about 1 US President’s salary).
I think such usual clawback taxes should be part of all bankruptcy AND bailouts.
Only when their own assets are on the line will the managers be adequately risk-averse about getting bailout cash or going bankrupt.
I also think bonuses should be more vested over a 4-5 year period.
Pay caps for bailed out firms are also fine –Becker and Posner (against them) notwithstanding
(via Fabius Maximus)