From TPM Reader XX …
I live in a wealthy NJ suburb which is home to a lot of Wall Streeters . I received an impassioned email plea from a neighbor who wants everyone to take action against the 90% taxation of bonuses. He works for JP Morgan Chase. He claims that his company was “forced” to take TARP funds and he should not penalized by the tax. Since his income is mostly in the form of a bonus, he thinks that the confiscation of the bonuses amount to a constitutional taking. As one who is not employed by one of the Tarp banks and whose own bonus is in jeopardy because of a collapsing economy (due to some of those banks misdeeds), I am less than sympathetic. In fact, I am a little miffed. However, my real question is:
Was JP Morgan really “forced” to take the funds, or was it just pressured by Paulson to take the funds or else jeopardize some future aid by the government? I can’t seem to find an answer.
Let me again stipulate, to start, that I think the current bill moving through Congress is probably a bad idea. Was JPMChase forced to take the money? I’m pretty sure no one was ‘forced’ to take the money, in a strictly legal sense. But I do recall that Paulson made clear he really wanted all the big exposed banks to take a big chunk. And a number of the banks made a big show about doing the Feds a favor by taking it. Whether that was just grandstanding or denial I’m not completely sure, possibly a mix of both. Because it quickly became clear that not only did many of them desperately need it, at least two (Citi and BofA) came back and pretty short order begging for substantially larger sums. My sense is that of the handful of big banks, JPMChase is in relatively good shape — though it’s hard to say how much that means since the others seem to be effectively insolvent and only remaining afloat via an implicit guarantee from the federal government. So I don’t know the best answer to whether JPMChase was ‘forced’. But if they were, perhaps they can suggest a schedule for paying the money back to the Treasury?
