Potential collateral damage to AIG rage

Fox News:

Lawmakers bellowed with outrage last week following revelations that AIG was paying millions in bonuses to employees at a rogue division based in suburban Connecticut.

But the restrictions House members prescribed in response -- a 90 percent tax on those bonuses -- could have painful side effects for the subsidiaries of other bailed-out financial companies, including one located just a few miles away from the troubled AIG unit.

Phibro, a commodities trading company located in Westport, Conn., potentially could be hit with the 90 percent tax on bonuses since its parent company, Citigroup, has received $45 billion in bailout money.

Phibro, though, has not actually taken federal rescue funds and is considered a relatively stable and profitable subsidiary of Citigroup.

The subsidiary side effect is just one example of the complications the House-passed bill could create if such a measure clears the Senate and heads to President Obama's desk.

U.S. Rep. Jim Himes, D-Conn., who represents the district where Phibro is based, said the bill is "undoubtedly replete with unintended consequences" -- the product of what he called "hasty work."

Himes, who voted for the bill, said hefty taxes on subsidiaries of bailed-out firms are one such consequence.

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The collateral damage is a result of the Democrats vain attempts to avoid the constitutional prohibition on bills of attainder. Even with the collateral damage I think the legislation still fails the constitutional test.