WORLD> America
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WORLD> America
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House passes bill taxing AIG and other bonuses
(Agencies)
Updated: 2009-03-20 07:49 "In the end, this is a symptom of a larger problem -- a bubble-and-bust economy that valued reckless speculation over responsibility and hard work," he said. "That is what we must ultimately repair to build a lasting and widespread prosperity." Topic No. 1 raised by Republicans during the House debate was the last-minute altering of a provision in Obama's $787 billion stimulus law to cap executive compensation for firms receiving government bailouts.
But Senate Banking Committee Chairman Chris Dodd, a Connecticut Democrat and the author of the provision, says the administration insisted that he modify his proposal so that it would only apply to payments agreed to in the future. That, critics claim, cleared the way for the AIG payouts. "The idea came from the administration," Dodd said Thursday Dodd said he was not aware of any AIG bonuses at the time the change was made. Treasury Secretary Timothy Geithner confirmed such conversations with Dodd. He said the administration was worried about possible legal challenges to the provision. "We expressed concern about this specific version," Geithner said in an interview with CNN. "But we also worked with him to strengthen the overall bill." The treasury secretary, who has been criticized for not learning of the AIG bonus payments sooner since he helped orchestrate the bailout last year as president of the New York Fed, said anew in the interview that he was not informed of the bonuses until last week. "And as soon as I heard about the full scale of these things, we moved very actively to explore every possible legal avenue to address this problem," Geithner said. A similar -- but not as punitive -- bill to recoup bonus payments with taxes was gaining support in the Senate. It would impose a 35 percent excise tax on the companies paying the bonuses and a 35 percent tax on the employees receiving them. The taxes would apply to all companies receiving government bailout money, but they are clearly geared toward AIG. "This is not just another case of runaway corporate greed and arrogance, ripping off shareholders by excesses lavished around the executive suite," said Rep. Earl Pomeroy, D-N.D. "These bonuses represent a squandering of the people's money. ... Starting right here, right now, we are saying no more." The Senate measure is sponsored by Sen. Max Baucus of Montana, the chairman of the Senate Finance Committee, and the panel's senior Republican, Chuck Grassley of Iowa. It was expected to be brought to the Senate floor next week. Meanwhile, New York's attorney general, Andrew Cuomo, said AIG has given him the list of employees who received a total of $165 million in retention bonuses. Cuomo said he won't release any employees' names until his office has answered any security concerns raised by the AIG employees. He also said he will work with AIG in the coming days to determine which workers have decided to return the payments. Cuomo had sought the names from AIG chief executive Edward Liddy through a subpoena. The deadline was Thursday. About 400 AIG employees and future employees received bonuses, but not all of them earned over the $250,000 family income threshold specified by the House bill. Obama administration special envoy Richard Holbooke was on AIG's board of directors in early 2008, when the insurance company committed to the bonuses, and during the previous years of aggressive investment strategies that brought the firm to brink of collapse. White House spokesman Tommy Vietor said Thursday: "Mr. Holbrooke had nothing to do with and knew nothing about the bonuses." While the House legislation calls for a 90 percent tax, Rep. Charles Rangel, D-N.Y., chairman of the tax-writing House Ways and Means Committee, said he expected local and state governments to take the remaining 10 percent of the bonuses. Rangel said the bill would apply to mortgage giants Fannie Mae and Freddie Mac, among others, while excluding community banks and other smaller companies that have received less bailout money. "The American people demand protection and that's what we're doing today," he told the House.
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