- The Washington Times - Wednesday, April 1, 2009

WASHINGTON (AP) - The House is taking another, albeit weaker, stab at trying to keep bailed-out financial institutions from paying their employees hefty bonuses after lawmakers had second thoughts about their vote two weeks ago to tax the bonuses away.

A new bill, expected to pass narrowly Wednesday, would allow the bonuses if the Treasury Department and financial regulators determine they are not “unreasonable or excessive.”

“No one has the right to get rich off taxpayer money” and “no one should get rich off abject failure,” said Rep. Alan Grayson, D-Fla., a co-sponsor of the bill.

While other lawmakers agreed, Congress has struggled to find consensus on the issue that has roiled voters.

Last month, lawmakers feverishly protested after AIG shelled out $165 million in bonuses to employees, including traders in the financial products unit that nearly brought about insurance company’s collapse, after accepting $182 billion in federal aid.

Denouncing a “squandering of the people’s money,” the House agreed 328-93 last month to tax away the bonuses.

But that bill, along with the latest measure, remains stalled in the Senate, where Democratic leaders said they planned to wait to act on bonus legislation until after Congress returns on April 20 from its two-week spring break.

Senate Majority Leader Harry Reid, D-Nev., will be “looking at this idea and others over the next few weeks,” his spokesman, Jim Manley, said.

Initially after the AIG flap, President Barack Obama had said he would “do everything we can to get those bonuses back.” But later, he warned the public against vilifying investors as he unveiled a new government-sponsored program encouraging private investors to buy up the billions of dollars of sour mortgage securities.

The latest House bill, sponsored by Democratic Reps. Alan Grayson of Florida and Jim Himes of Connecticut, heeded Obama’s message and took a softer tack. Under the bill, Treasury Secretary Timothy Geithner and financial regulators would set standards for employee compensation at companies that accept bailout money, taking into account an employee’s performance, as well as the stability of a financial institution.

Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, said the bill would apply only to institutions that receive money through the government’s $700 billion Troubled Asset Relief Program and would not apply to those participate in other TARP-related programs, including Obama’s new public-private investment program.

Also on Wednesday, House Democrats failed to ram through a separate measure by Michigan Rep. John Conyers Jr. that would have enabled the attorney general to sue employees to return the bonuses, even if they were promised the money in a contract.

The 223-196 vote on the bill by Conyers, D-Mich., who chairs the House Judiciary Committee, was short of the two-thirds support needed to suspend the rules and limit debate on the bill.

Ultimately, 31 Democrats sided with Republicans to block it, with lawmakers worried it would deter the financial industry from partnering with the government to salvage the economy.

Himes was among those who opposed the measure. A spokeswoman said he opposes setting firm limits.

“By contrast, his bill provides guidance to regulators to address compensation in a responsible manner to tie pay to performance,” said spokeswoman Elizabeth Kerr.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide