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Wan LixinOpinion deputy editor of Shanghai Daily
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House vote may claw back all of AIG's controversial bonuses
By Tom Raum |
March 21, 2009, Saturday
|
Print Edition
Print Edition
DENOUNCING a "squandering of the people's money," United States politicians voted decisively to impose a 90-percent tax on millions of dollars in employee bonuses paid by troubled insurance giant AIG and other bailed-out companies.
In some cases the bonuses might be taxed 100 percent -- leaving the recipients with nothing.
It was only last weekend that the bailed-out insurance giant paid bonuses totaling US$165 million to employees, including traders in the Financial Products unit that nearly brought about AIG's collapse.
AIG has received US$182.5 billion in federal bailout money and is now 80 percent government owned.
Disclosure of the bonuses touched off a national firestorm that both the Obama administration and Congress have scurried to contain.
The House of Representatives vote was 328-93. Similar legislation has been introduced in the Senate, and US President Barack Obama quickly signaled general support for the concept.
"I look forward to receiving a final product that will serve as a strong signal to the executives who run these firms that such compensation will not be tolerated," the president said.
"We want our money back now for the taxpayers," said House Speaker Nancy Pelosi. "It isn't that complicated."
Charles Rangel, a New York Democrat and chairman of the tax-writing House Ways and Means Committee, said he expected local and state governments to take the remaining 10 percent of the bonuses, nullifying the pay-outs.
In a statement issued by the White House, Obama said the vote "rightly reflects the outrage that so many feel over the lavish bonuses that AIG provided its employees at the expense of the taxpayers who have kept this failed company afloat.
"In the end, this is a symptom of a larger problem - a bubble-and-bust economy that valued reckless speculation over responsibility and hard work," he said.
"That is what we must ultimately repair to build a lasting and widespread prosperity."
Obama did not explicitly endorse the House bill. Instead, he was careful to take a wait-and-see attitude on the details of the final legislation while making clear that he supports the effort to get the bonus money back.
The lopsided vote failed to reflect the contentious political battle that preceded it.
The House vote, after just 40 minutes of debate, showed how quickly Congress can act when the political will is there.
In some cases the bonuses might be taxed 100 percent -- leaving the recipients with nothing.
It was only last weekend that the bailed-out insurance giant paid bonuses totaling US$165 million to employees, including traders in the Financial Products unit that nearly brought about AIG's collapse.
AIG has received US$182.5 billion in federal bailout money and is now 80 percent government owned.
Disclosure of the bonuses touched off a national firestorm that both the Obama administration and Congress have scurried to contain.
The House of Representatives vote was 328-93. Similar legislation has been introduced in the Senate, and US President Barack Obama quickly signaled general support for the concept.
"I look forward to receiving a final product that will serve as a strong signal to the executives who run these firms that such compensation will not be tolerated," the president said.
"We want our money back now for the taxpayers," said House Speaker Nancy Pelosi. "It isn't that complicated."
Charles Rangel, a New York Democrat and chairman of the tax-writing House Ways and Means Committee, said he expected local and state governments to take the remaining 10 percent of the bonuses, nullifying the pay-outs.
In a statement issued by the White House, Obama said the vote "rightly reflects the outrage that so many feel over the lavish bonuses that AIG provided its employees at the expense of the taxpayers who have kept this failed company afloat.
"In the end, this is a symptom of a larger problem - a bubble-and-bust economy that valued reckless speculation over responsibility and hard work," he said.
"That is what we must ultimately repair to build a lasting and widespread prosperity."
Obama did not explicitly endorse the House bill. Instead, he was careful to take a wait-and-see attitude on the details of the final legislation while making clear that he supports the effort to get the bonus money back.
The lopsided vote failed to reflect the contentious political battle that preceded it.
The House vote, after just 40 minutes of debate, showed how quickly Congress can act when the political will is there.
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