House votes to recoup most of AIG bonuses

March 20, 2009|By James Oliphant | James Oliphant,Tribune Washington Bureau

WASHINGTON -Struggling to keep ahead of public outrage over the actions of Wall Street firms, the House of Representatives passed a bill yesterday that seeks to recoup the lion's share of the $165 million in bonuses paid to executives of American International Group Inc.

The House measure, hurriedly drawn up on the orders of Democratic leadership, imposes a 90 percent tax on those who were paid bonuses at AIG and other firms as long as their families earned more than $250,000 annually and their companies received more than $5 billion in federal bailout funds. It passed by more than a two-thirds majority, 328 to 93.

All but one of the representatives from Maryland voted in favor of the measure. Rep. Roscoe Bartlett of Frederick, the state's lone Republican, voted against it.

The Senate is taking a different approach. It is readying a bill that would levy a 35 percent excise tax on executive bonuses. Both the company and the recipient of the bonuses would pay the tax. The Senate could take up the measure next week, or perhaps attempt to reconcile it with the House tax bill.

Even as the House voted, New York's attorney general, Andrew M. Cuomo, announced that AIG had complied with a request to turn over the names of those in the company who had received the bonuses. Cuomo pledged to be cautious in releasing the names because of concerns over the employees' safety.

The House bill, sponsored by New York Democratic Rep. Charles B. Rangel, garnered significant Republican support. But that did not come without a bitter debate, with conservative Republicans angrily denouncing the measure as a charade intended to deflect blame from Democrats about how the AIG bonuses were permitted to be paid.

They remained focused on an embarrassing disclosure by Senate Democrats Wednesday that they acceded to a Treasury Department request in February to scale back language in the economic stimulus bill that would have limited the payments.

"This bill is nothing more than an attempt for everybody to cover their butt up here on Capitol Hill," said Rep. John A. Boehner of Ohio, the House Republican leader. Opponents advocated a separate plan that would require the Treasury Department to seek repayment of the funds immediately. And some suggested the bill was an unconstitutional attempt to penalize a specific company, though legal experts said yesterday that the bill would probably pass muster by the courts.

Supporters said the bill was the most effective means for the government to seek redress of the bonus money.

"This vote is the difference between solving the problem or continuing the problem," said New York Rep. Steve Israel, a Democrat. "The only way to get their money back is to tax it back."

Some Republicans agreed. "At the end of the day, this insult to taxpayers cannot, should not, and will not stand," said Rep. Dave Camp of Michigan.

Republicans were clearly divided, with nearly half supporting the Rangel measure, perhaps worried about how constituent anger over the AIG payouts might be visited upon them.

Democrats charged that Republicans had opportunistically changed their tune on the compensation issue, noting that many have resisted past attempts to limit executive pay.

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