- Sep 30, 2003
Well, for one thing this does emphasize the poor job Congress did initially.WASHINGTON - The Democratic-led House overwhelmingly approved a bill on Thursday to slap punishing taxes on big employee bonuses from AIG and other firms bailed out by taxpayers.
The vote was 328-93.
"We want our money back and we want our money back now for the taxpayers," said House Speaker Nancy Pelosi, D-Calif.
The bonuses, totaling $165 million, were paid to employees of troubled insurer American International Group, including to traders in the unit that nearly brought about the company's collapse.
In all, 243 Democrats and 85 Republicans voted "yes" on the bill. It was opposed by six Democrats and 87 Republicans.
The margin of victory came despite sharp Republican attacks calling the legislation a legally questionable ploy to paper over Obama administration missteps.
Minority Leader John Boehner, R-Ohio, said the bill was "a political circus" diverting attention from why the administration hadn't done more to block the bonuses before they were paid.
However, although a number of Republicans cast "no" votes against the measure at first, there was a heavy GOP migration to the "yes" side in the closing moments.
The bill levies a 90 percent tax on bonuses paid to employees with family incomes above $250,000 at companies that have received at least $5 billion in government bailout money.
"We figured that the local and state governments would take care of the other 10 percent," said Charles Rangel, D-N.Y.
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.
A tax expert said there is plenty of precedent for levying punitive taxes on behavior that lawmakers find objectionable. Robert Willens, a corporate tax lawyer in New York, cited the steep excise taxes levied on money paid to firms to keep them from launching hostile takeover bids, known as "greenmail."
"You can write very narrowly tailored laws," Willens said. "And they can do it for bonuses already paid."
House Democratic leaders unveiled the bill Wednesday as the head of embattled American International Group Inc., which has received $182 billion in bailout money, testified about $165 million in bonuses paid out in the past week to about 400 employees in its Financial Products unit.
Edward Liddy, who was brought in last year by the government to run AIG, told a House subcommittee that the company was contractually obligated to pay the bonuses but that some of the recipients have begun returning all or part of them.
Liddy said that on Tuesday, he had "asked those who have received retention payments in excess of $100,000 or more to return at least half of those payments." Some have "already stepped forward and returned 100 percent," he added.
In the Senate, the top two members of the Finance Committee on Tuesday announced a bill that would impose a 35 percent excise tax on the companies paying the bonuses and a 35 percent excise tax on the employees receiving them. The taxes would apply to all companies receiving government bailout money, but they are clearly geared toward AIG.
Now we another poorly thought-out rushed bill slammed through Congress.
Was this justified?
If so, was there a better way?
Is anyone else alarmed at the government's behavior here?
Firstly, I think each of the 400 bonuses should have been examined to see if they were justified or not. We've been repeatedly informed that 'regular' salaries are purposefully low for these type finacial employees. Their compensation is meant to be performance driven and so they get 'bonuses' (seems more like commissions to me), why not do the prudent, adult thing and examine each as has been proposed? Setting an artificial base-line of $250K and then confiscating the bonus of everyone who makes that much or more sounds a way too (politically) 'ideological' to me.
The federal government installed the CEO who has ultimate authority over these bonuses. FFS it's their own guy making the call. Even though they put him in do they not have any confidence in him? Makes no sense to me from a rational or 'fair-play' standpoint.
If the bonuses were 'bogus' why not take the normal route and sue, or prosecute? The NY AG is already on it, and Franks says he's gonna subpeona the bonus information, so why rush ahead with this bill? Why break contracts and set a bad example? The federal government's only plan (and I use the word 'plan' loosely here) for toxic assets and the banking mess is to get private sector help (and capital) to buy these things. You wanna deal with the governemtn when they show no hestitation is breaking their word? I'd be very reluctant to partner with them after this.
The federal government just purchased 80% of this company, aren't there other means to correct this as a (hugely) majority shareholder? Why shouldn't the government be held to the same rules as the rest of us?
I'm still predicting the law of 'Unintended Consequences' is gonna kick some butt with this.
Hopefuly, there more adults in the Senate (but I'm not optimistic).