One Year Later: Members Call For Senate To Pass Peters' Bill To Reclaim AIG Bonuses
Press Release
As the one year anniversary of House passage approaches Friday, Congressman Gary Peters, along with other Members of the U.S. House, today called on the Senate to pass legislation Mr. Peters co-authored a year ago to reclaim egregious bonuses paid to executives of AIG and other bailed out financial institutions. Last March, after receiving over $170 billion in taxpayer funds, AIG announced it would pay an initial $165 million in bonuses to executives in its financial products unit, the division whose investments led to the company needing a taxpayer bailout, part of a planned total of $450 million in bonuses for the unit and up to $1.2 billion for the entire company. Last month, AIG announced disbursement of another $100 million in bonuses.
Congressman Peters' legislation (H.R. 1586) would recover these bonuses for taxpayers by creating a 90 percent tax on bonuses paid to employees on or after January 1, 2009 by companies receiving $5 billion or more in TARP funding. Much or all of the remaining 10 percent would be recovered by regular state and local taxes. The bill passed the House last March 19 by a vote of 328-93. Today, Congressman Peters and other Members of the House sent a letter to Senate Majority Leader Harry Reid urging him to move this legislation in the Senate.
The text of Congressman Peters' letter follows.
March 17, 2010
The Honorable Harry Reid
522 Hart Senate Office Bldg.
Washington, DC 20510
Dear Leader Reid:
We write you today as sponsors and supporters of H.R. 1586, legislation the House passed one year ago today that would reclaim for taxpayers any bonuses paid to employees of companies which have received over $5 billion from the TARP, such as American International Group (AIG). Last March, after receiving more than $170 billion in taxpayer funds, AIG paid $165 million in retention payments to executives. Many of these executives are responsible for the mismanagement that drove their company into near bankruptcy and necessitated a massive taxpayer bailout.
The House of Representatives reacted swiftly to these outrageous bonuses by introducing and passing H.R. 1586 within a week of their distribution. Specifically, H.R. 1586 would impose a new 90% income tax on bonuses received by individuals from companies which have received over $5 billion from TARP. It would also apply to bonuses paid by Fannie Mae and Freddie Mac. The tax only would apply to bonuses received by taxpayers with adjusted gross income over $250,000.
Upon passage of H.R. 1586 one year ago, this legislation was sent to the Senate where it awaits further action. It is a step in the right direction that approximately $39 million of the initial round of bonuses has been returned to the Treasury and taxpayers by AIG. Despite this, AIG recently distributed a new round of bonuses totaling $100 million. AIG is technically under compensation restrictions, but these "guaranteed bonuses" were in place before AIG's collapse and must be honored under current law. While this new round of bonuses have been reduced by either 10% or 20% for employees who still work for the financial products unit and those who have left the company respectively, taxpayers are not satisfied that they are only paying for $100 million in new bonuses instead of $120 million.
These recent bonuses emphasize the need for legislation reclaiming these large retention payments. Congressional action reclaiming these bonuses through the tax code would be both effective and constitutional. On the one year anniversary of House passage of H.R. 1586, we urge you to take up this bill or similar legislation as soon as practicable, and ensure that these unjust bonuses are returned to the taxpayers.
Sincerely,
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