In response to public outrage over the $165 million in bonuses awarded to AIG executives, the House voted 328 to 93 to levy a 90 percent tax on the money.
“The people have said no,” said Earl Pomeroy, D-N.D. “In fact they have said, ‘Hell, no.’ Have the recipients of these checks no shame at all?”
Outrage over the bonuses has been building in recent days after the Treasury Department disclosed the payments over the weekend. AIG has so far received $173 billion in bailout money.
The House bill would impose a 90 percent surtax on payments made to executives and highly compensated employees of any firm that received at least $5 billion in federal assistance, retroactive to any bonuses paid after Dec. 31, 2008. The bill was supported by 243 Democrats and 85 Republicans, and opposed by six Democrats and 87 Republicans during the vote Thursday.
Treasury Secretary Timothy Geithner has been on the receiving end of criticism over the bonuses and has been under pressure to negotiate a way out with AIG. AIG Chairman Edward Liddy (pictured) was grilled at a congressional hearing on Wednesday over the pay arrangements. The contracts for the bonuses, however, were signed before either he or Geithner were appointed.
Liddy told the House Subcommittee on Capital Markets, Insurance, and Government-Sponsored Enterprises that he has recommended to executives who received bonuses over $100,000 that they voluntarily return at least half the money. Some have already done so, including an executive vice president who received a bonus of over $6.4 million, according to The Wall Street Journal. Liddy declined to reveal the identities of the executives who have received the bonuses, noting that the company has been inundated with death threats.
The pressure to do something about the AIG bonuses has been mounting. President Barack Obama and congressional leaders took turns expressing their frustration this week. “I think people are right to be angry,” said Obama. “I’m angry.”
Senate Finance Committee ranking member Charles Grassley, R-Iowa, suggested that AIG executives might consider committing hari-kari, saying they should follow the Japanese model and “take a deep bow and say, ‘I’m sorry,’ and then either do one of two things: resign or go commit suicide.” Grassley later backtracked from those remarks, saying that he did not want any AIG executives to commit suicide, but that he did want them to apologize.
The Senate Finance Committee has proposed its own bill for taxing AIG executives on their bonuses. Grassley, along with chairman Max Baucus, D-Mont., Ron Wyden, D-Ore., and Olympia Snowe, R-Maine, have proposed the Compensation Fairness Act of 2009, which would impose a 35 percent excise tax on retention bonuses and other bonuses of executives and employees of companies that have received funds from the Troubled Asset Relief Program. The Senate bill is likely to come up for a vote next week.
