Revolutionary War and War of 1812 Battlefield Protection Act

Floor Speech

REVOLUTIONARY WAR AND WAR OF 1812 BATTLEFIELD PROTECTION ACT -- (Senate - March 17, 2009)

BREAK IN TRANSCRIPT

AIG EXECUTIVE COMPENSATION

Mr. WHITEHOUSE. Mr. President, I come to the floor to talk about the question of executive compensation triggered in particular by the recent round of bonuses paid to executives at AIG who had such a significant role in putting America into the economic distress we are in now. I have vented probably 50 times over this already, so I have calmed down a bit, but it is truly infuriating. I believe all my colleagues share how frustrating and infuriating it is. What is it about these people? They don't seem to get it. At long last have they no sense of humility? Have they no sense that their wretched corporation would not even exist today if it were not for the good will of millions of American taxpayers whose own economic future is being put at risk to prop up this corporation? Then they turn and do this?

It is not only I. I was in Rhode Island over the weekend. I stopped at Coffey's service station to have the oil changed. It was the one thing the mechanics were furious about. People don't come up to me and talk about issues all the time. I am a pretty normal person. We bump into each other, and we talk about various things. They were all over this. I stopped at Amenities Deli in Providence to pick up coffee and a muffin. Rosie, who runs it, all over this. I went to a meeting with the police chief and some community organizers in Olneyville. There was the local media, the radio stations, all over it. People are so angry.

What has happened is, the view has appeared that there isn't anything we can do about this. What I would like to say is, I believe that view is wrong. I am pleased President Obama has directed Treasury Secretary Geithner to use the Treasury's leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole.

It is not just these bonuses. There is more out there. The Wall Street Journal reported weeks ago that there is $40 billion in deferred executive compensation waiting to be paid to recipients of the TARP plan of Federal taxpayer generosity. We are not doing anything about that either. The problem is fairly simple. In the ordinary course, these companies which have wrecked themselves would ordinarily be insolvent and would ordinarily go into bankruptcy. In bankruptcy, you would have a judicial forum. The court would make determinations about who gets paid under a regular schedule. These executive compensation schemes--deferred compensation is a tax dodge, so how wonderful that that should be favored now--these compensation schemes come at the very end. You line up at the back of the line with the unsecured creditors and you may get paid only pennies on the dollar. But because of their importance, because they were too big to fail, because we had to keep our financial system going, we could not allow them to go into bankruptcy. That was the decision. That took away that judicial forum.

Because we haven't replaced it under American law, where you can't undo a contractual obligation, you can't willy-nilly take it away, not without providing due process of law, all the way back to that case that all of us learned in the first year of law school, Fuentes v. Shevin. When the sheriff came to take away Mrs. Fuentes' stove because she hadn't paid for it, the Supreme Court said: You can't take Mrs. Fuentes' stove away, even if she hasn't paid for it, not without giving her a chance to be heard. So we have to create a place where the Government can go to contest these executive compensation schemes and have a proper due process hearing and air it out before the people.

The legislation I have proposed is called the Economic Recovery Adjustment Act of 2009. It would permit the Government, after notice and a hearing, consistent with due process principles, to reduce excessive executive compensation obligations at financial institutions that have received Federal bailout funds. It would also create an office of the taxpayer advocate in the Department of Justice to take the other side in the contest between the executives and the public, the Department of Justice would represent the public. Finally, you would set up a temporary court, a temporary recovery oversight panel of sitting bankruptcy judges. You don't have to create new positions. You take sitting bankruptcy judges and create a temporary panel and you can get this heard.

I don't wish to speak long. I know the distinguished Senator from Vermont is waiting. I do wish to assure my colleagues that if we want to ventilate about this, if we want to wring our hands about it, if we want to give speeches about how it is outrageous, we can do that. But if we actually want to do something about it, within the constitutional restrictions of the United States, I believe the bill I have proposed will allow us to do it. Frankly, I don't see another way. I invite colleagues to discuss it further with me. I don't think I have an exclusive piece of wisdom here. I do think there may be ways the bill could be improved. I am willing to listen to anybody.

I can't tolerate a situation in which we do nothing, in which we unilaterally disarm the U.S. Government from doing anything about this compensation by failing to set up the basic judicial method through which we could take a look at this and try to make things right.

Again, I invite my colleagues to be in touch on this, if they are interested in pursuing it. I think it is necessary. I appreciate the indulgence of the Chair. I appreciate the indulgence of the distinguished Senator from Vermont.

I yield the floor.

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