Moving with unusual speed, the US House of Representatives on Thursday passed a bill to tax bonuses to employees at companies getting federal bailout money and recoup most of the $165 million paid to American International Group executives.
AIG complied with a subpoena and provided details of bonus recipients to New York Attorney General Andrew Cuomo. But he said his office -- aware of threats made against AIG employees -- would conduct a risk assessment before releasing any names.
The House, responding quickly to public outrage over the bonuses after the giant insurer received up to $180 billion in US aid, voted 328-93 to approve a 90% tax on bonuses for certain executives at companies getting government aid.
The tax would apply to executives with incomes over $250,000 who worked for companies that received at least $5 billion in federal aid. That would include others getting help, such as mortgage financing company Fannie Mae.
“The whole idea that they should be rewarded millions of dollars is repugnant to everything that decent people believe in,” said Representative Charlie Rangel, the Democratic chairman of the tax-writing Ways and Means Committee.
Anger over the bonuses at AIG and other large companies that have received federal bailout money threatens to undermine confidence in President Barack Obama’s efforts to solve the financial crisis and pull the economy out of a deep recession.
The Senate as early as Friday could consider its own plan to recoup the bonuses via a 70% excise tax for companies that received at least $100 million from the $700 billion bailout fund.
The two chambers would have to reconcile any differences to bills they pass before it could go to Obama for signing and become law. AIG CEO Edward Liddy told Congress on Wednesday he has asked employees to give back at least half of their retention bonuses and that some had already given back their entire bonuses.
But he said the payouts were necessary to retain top employees with specialized knowledge to dispose of $2.7 trillion in complex securities that ended up dragging the insurer to the brink of collapse last year.
Angry House Republicans blamed Democrats who control Congress and the White House, accusing them of allowing the bonuses to be paid in the first place. Some questioned whether the legislation approved would survive court challenges. (Reuters)