Clawing back Wall Street Bonuses

Steve Waldman's Interfluidity blog looks at the issues surrounding clawing back the bonuses from the Wall Street crowd that caused so much damage to the US and the world. There are some interesting points made. I like this bit that argues this is a civil action and just like environmental laws dealing with toxic waste can apply ex post facto, so civil law should apply to "toxic assets":

Conor Clarke suggests that such a bill would be unconstitutional on its face. I think he's wrong about that. He cites the following line from the US Constitution:

No Bill of Attainder or ex post facto Law shall be passed.

I am not a lawyer, but I don't think this prohibition would much apply, as long as the tax is civil and remedial in nature, rather than criminal and punitive. Consider the so-called "Superfund" law, which made polluters liable for cleaning up environmental messes, even though that liability may not have been written into law at the time when the polluting was done. The current banking crisis strikes me as quite analogous to the Superfund situation: A large class of private actors have caused harms that must be remedied. While the state has no choice but to pick up some of the tab, it also identifies the responsible party and holds them partially liable for the mess they have made. We even use the same words: It's all about "toxic waste".

I especially like this bit of honesty:

The law may be the law, but it is also a battlefield upon which people play to win and hypocrisy is everywhere. I'd like to be idealistic, but if that means a kind of "unilateral disarmament" under which the least idealistic run roughshod, we'd better try a different strategy.

He has more here as well. Where he presents reasons to be cautious:

In our better moments, we dislike "collective punishment" and try not to change the rules of the game out from under people midstream. On balance, I think the benefits of a well designed tax clawback could exceed its costs. But a poorly designed clawback would set a corrosive precedent for no other purpose than to salve and misdirect public rage.

And he comes out against HR1586 here.