NYT editorial: Taming the Fat Cats

President Obama seems genuinely, if belatedly, upset about the way America’s voracious bankers leveraged hundreds of billions in taxpayer bailouts to line their pockets with multibillion-dollar bonuses while American businesses starve for credit.

Before he gets over his anger, he might want to take a look at how the British found a way to realign the fat cats’ boundless greed with the public interest: slapping a hefty windfall tax on their bonuses. He still has time to push Congress to enact a similar levy here.

Bankers have rushed to repay their bailout loans to the Treasury so they can avoid the constraints on compensation that came with the assistance. Unshackled, they are putting together bonus pools for 2009 that would rival the record-breaking packages of 2007 — the year before their foolhardy bets tipped the world into its worst economic crisis since the 1930s.

The administration can make a very good case that the Treasury is entitled to much of this money. After all, what profits the banks have made over the last year were funded by oodles of cheap financing provided by the Federal Reserve. This is a windfall that they should not be allowed to keep.

(More here.)