More on retroactively punitive measures

2009/03/18

Even more fallout from the AIG bonus situation:

http://www.cnn.com/2009/POLITICS/03/18/aig.bonuses/index.html
http://money.cnn.com/2009/03/18/news/companies/aig_hearing/index.htm?postversion=2009031809

At least, in these cases, the suggestions seem to be a little more rational than the fiery rhetoric that has been flowing around in the past few days. I think that Geitner has put forth the most reasonable proposal thus far: have AIG pay back to the Federal government an amount equal to the bonuses paid out. In some ways, I think it would be better if we did this, and let the matter go, rather than focusing so much effort on punishing the bonus recipients, while taking our collective attention away from the bigger picture. In many ways, that bigger picture is far more important; it is becoming more and more likely that additional banks and other financial institutions will need Federal bailout funds in the near future. This being the case, I’m more concerned with preventing this sort of behavior in the future than I am with performing legal contortions to punish a handful of individuals after the fact.

WRT efforts made at punishing the bonus recipients, I focused yesterday on the potential legislation being considered in Congress, and the similarity between such legislation and Constitutionally prohibited bills of attainder. I didn’t consider arguing the point WRT ex post facto laws because, franky, I didn’t think Congress would be stupid enough to enact a law that had flagrantly ex post facto provisions. My brother also pointed out that the ex post facto provision in the Constitution has been upheld in the Supreme Court as applying only to criminal acts [1], so unless the bonus recipients are brought to trial for some manner of criminal offense, an ex post facto challenge would not apply. Additionally, bills of attainder were historically used to impose punishment, while sidestepping the minor annoyance of holding a trial for the individual or individuals in question. Bills of attainder also do not necessarily require ex post facto components, though they often did as a means of providing a shallow justification for the punishment they imposed.

Another objection that may be legitimately raised is the Constitutional prohibition against depriving an individual of due process via the Fifth Amendment. [2] Punitive legislative acts, such as the ones being considered, appear to violate the due process clause, since they seek to apply punishment not only for acts that were not illegal at the time they were committed, but also without the benefit of a trial, either civil or criminal. Part of the issue here is that while the funds AIG used to pay out the bonuses were public funds (i.e. they came from the Treasury Department), the money has now changed hands and is now in private accounts, i.e. the funds could now be considered private property. While the administration could still recoup the monetary amount from AIG (the Federal government now being the majority shareholder), I’m not so sure that Congress could force repayment from the individuals who received the bonus payments. To do so would require justifying the seizure of private properrty, and without the benefit of a trial, I don’t think that Congress can make a legitimate case justifying their action.

Yet another objection could be framed around the provisions of the Eighth Amendment. [3] Some of the legislative acts under consideration propose recouping the funds via excise taxes in excess of 90% of the total amount of income received. Some have even argued that Congress has the right to tax the bonus income up to 100% of its value, and more. [4] I’m fairly sure that I don’t have to explain how this qualifies as “excessive”, as it is plainly obvious (okay, it is to me, but if you really need an explanation of this, please let me know).

I take some solace in the knowledge that even if Congress does pass a law to the effect of what is being suggested now, the individuals affected would still have a legitimate challenge WRT the constituionality of the law that imposed the punitive measures. I would hope that our elected officials think through the ramifications of the measures they are currently contemplating, rather than forcing the inevitable Constitutional challenges that would follow. Unfortunately, I fear that the cries for blood coming from all sectors will overwhelm said officials’ sensibilities in this regard. Alas.

I also suggest the following quotations (from vastly different sources) as disincentives for enacting the punitive measures now under consideration:

  • “…one legislative interference is but the first link of a long chain of repetitions, every subsequent interference being naturally produced by the effects of the preceeding.” [5]
  • “…reasons for taking their property are never lacking, and he who begins to live by stealing always finds a reason for taking what belongs to others…” [6]

The sources may be different, but the general implication is the same. Once an act is committed (especially an abhorrent one), each subsequent repetition of said act becomes easier by using the original act as precedent. Additionally, one is never lacking excuses for repeating said act in the future. Hopefully, our elected officials will not jump off this particular cliff. Hopefully, reason will win the day.

Notes:

[1]: Supreme Court decision in Calder v. Bull: http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=search&linkurl=<%LINKURL%>&graphurl=<%GRAPHURL%>&court=US&case=/us/3/386.html

[2]: “No person shall be…deprived of life, liberty, or property without due process of law”

[3]: “Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.” (emphasis added)

[4]: Sorry, but I don’t have a reference for this one; I overheard it while the Congressional subcommittee meeting was on TV this morning, but I didn’t catch which Congressperson suggested this. If I find out who, I’ll add a citation here.

[5]: James Madison, The Federalist, Number 44.

[6]: Niccolo Machiavelli, The Prince, Chapter XVII, Of Cruelty and Mercy, and whether it is better to be loved than to be feared, or the contrary.

[7]: Warm and fuzzy feeling: I just heard one of the commentators on MSNBC (Eugene Robinson of The Washington Post) compare the punitive legislation to bills of attainder. At least I’m not alone here!

Advertisements

2 Responses to “More on retroactively punitive measures”

  1. MI Says:

    FWIW, Laurence Tribe has endorsed the constitutionality of clawing back bonuses:

    http://business.theatlantic.com/2009/03/laurence_tribe_is_taxing_aig_legal.php

    I’m not terribly impressed with his opinion, seeing as how he fails to discuss the original meaning of the Fifth Amendment, & how such measures can be squared therewith.

    • seeker312 Says:

      Given his connection the the President, I’m not entirely convinced of Mr. Tribe’s impartiality in this matter. Additionally, the response he gives seems to have more to do with preventing future payouts of this nature, rather than addressing the ones already made. His argument does not convince me that any retrospective law could be sufficiently generalized to pass muster as not being a bill of attainder and target the recipients of the bonus pay. I’ll have to do a little more reading on the sources provided, but I’ll do that tomorrow.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: