ABC’s Z. Byron Wolf reports: Lawmakers from both parties on Tuesday threatened to action to recover bonuses paid to executives at insurance giant AIG which has received four rounds of federal bailout money totaling $165 billion.
"Give the money back or we’ll take it away," railed New York Sen. Charles Schumer on the Senate floor today.
And this evening, Senators from both parties announced a broad agreement to move quickly on a bill that would tax the bonuses from AIG and executives right back into federal coffers.
By passing the legislation, which would seek to incur a 35 percent excise tax on both AIG for paying the bonuses and on the executives for taking them, Finance Committee Chairman Max Baucus said that in addition to other taxes that would already be levied on the bonuses, "we’ll get the bulk of it back."
We’ll get most of it back," he said. "35 and 35 is 70 and you add in the other income taxes, that’s pretty close to 100 percent. So we’ll get the bulk of it back. We’ll get the bulk of it. Somebody might slip through the cracks, but we’re going to write this in a way so that virtually everyone who received one of the retention bonuses as well as other bonuses are covered."
Details on the legislative proposal are still being worked out, but it would apply in some form to all companies receiving TARP funding.
A Similar provision to tax bonuses at companies receiving TARP funds had been included in a Senate-passed version of the stimulus bill last month. But in the final version of the stimulus the language was dropped. And another provision to curb executive compensation at companies receiving federal bailouts was changed to create an exemption on executive compensation rules for contracts signed by executives and corporations before February 11th of 2009. A separate provision to place the excise tax on bonuses was dropped altogether.
"We fought during the conference to maintain that provision. Regrettably it was dropped. And regrettably we could have been in the situation today very different had that provision become law. Hope we can reconsider it," said Sen. Olympia Snowe, R-Maine, who had written the provision to tax employee bonuses which was dropped from the stimulus.
Sen. Chris Dodd, the Banking Committee Chairman wrote the provision to limit executive compensation, which was watered down in the final stimulus bill by exempting contracts made before February 11th. Today, he took credit for writing the language to crack down on compensation in the future, but said he could not be blamed for allowing compensation agreed to in the past to continue.
"Well it was people negotiating those provisions at the time others who felt strongly it ought to be modified it ought to be stricken entirely… I wasn’t in the room I can’t answer the question," he said of who actually put the February 11th date in the bill.
Sen. Max Baucus, however, was in the room. But today he said it was actually staff and representatives from the Treasury Department who wrote the final bill.
He was asked today by a reporter: "This confusion that exists, since you were a conferee on the stimulus. What happened to the Dodd provision that was in the bill that he says did not contain this Feb. 11, 2009 date. And then what happened to this Ron Wyden/Olympia Snowe proposal about this excise tax that was just dropped?" the reporter asked.
"Good question. I’ve asked that same question," Baucus said.
The reporter pushed: "I mean you were a conferee, do you know what happened?:
"Uh. No. This was a huge bill. We agreed on structure. Then when staffs and treasury get in the room and actually write it, that’s where it got dropped. And frankly, it was such a rush, talking about the stimulus bill right now, to get it passed, I did not have time – other conferees did not have time to address many of the provisions that were modified significantly. We do the best we can, but we missed that stuff as a result."
"That should have passed. But it didn’t."