Himes’ Bill to Curb Bonus Payments Passes House
HIMES
Norwalk Hour
Tait Militana
Boston University Washington News Service
04/01/09
WASHINGTON—The House took major steps Wednesday to curb bonus payments to employees of companies such as American International Group, granting expanded powers to the Treasury Department to prohibit employee compensation it deems “unreasonable or excessive.”
The bill, which applies to recipients of federal money from the Troubled Asset Relief Program, would allow Treasury Secretary Timothy Geithner to establish performance-based guidelines that any future bonus payments would have to adhere to.
Rep. Jim Himes, D-4, who drafted the bill with Rep. Alan Grayson, D-Fla., said the legislation is necessary to protect taxpayer money.
TARP recipients, Himes said, “have a fiduciary responsibility to their shareholders. Like it or not, American taxpayers are now shareholders.”
The bill, which is the first Himes has authored, comes after outrage over $165 million in bonuses doled out to some AIG employees. In response last week, House lawmakers tried to implement a 90 percent tax on those bonuses, but the movement fizzled as the White House distanced itself from the legislation, asking Americans not to demonize all businesses.
The Himes bill would differ from the tax bill because it would not reclaim bonuses already paid to AIG employees. Instead, it would establish standards that could block future bonuses.
According to AIG CEO Edward Liddy, who testified before Congress last month, several employees have voluntarily given back their bonuses.
Himes, who voted for the bonus tax, said reclaiming the AIG bonuses is a separate issue. He said his bill is better than the tax because it would establish a single set of limits on bonuses.
“Someone within the government, which is now a major shareholder in many financial institutions, has to opine,” Himes said. “I’d rather it be the Treasury with its knowledge and expertise in the industry than 435 congressmen.”
Nonetheless, the bill received cold responses from Republican lawmakers, who had voted narrowly against last month’s House-passed bill. Republicans warned that the Himes proposal would grant too much power to the Treasury.
The House approved Himes’ legislation, 247-171, with Republicans dividing, 163 to 10 against the bill.
Rep. Virginia Foxx, R-N.C., said the bill was a veiled attempt to allow the government to control the salaries of employees at TARP recipient firms.
“The deception is that this is only for executives,” Foxx said. “It is not. It allows the Treasury to set salaries for all employees.”
Rep. Roy Blunt, R-Mo., said the bill would grant government influence in places it should not be.
“To try to tell these companies how to pay the people that work for them is not the right thing to do,” Blunt said.
Himes expressed disappointment that the bill was divided along party lines, but said protecting taxpayer dollars should be a goal of all lawmakers.
“The notion that compensation should be wired to performance should not be a partisan issue,” Himes said.
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