| WASHINGTON, April 1
WASHINGTON, April 1 The U.S. House of
Representatives on Wednesday opened debate on legislation to
curb employee pay at financial firms that receive government
bailouts, a bill that could supplant an earlier effort to
heavily tax executive bonuses.
The "Pay for Performance Act of 2009" would give U.S.
Treasury Secretary Timothy Geithner broad powers to "prohibit
unreasonable and excessive compensation and compensation not
based on performance standards."
The move comes in the wake of public anger over bonuses
paid to employees of the American International Group unit that
nearly collapsed the company.
It would replace the bill previously passed by the House of
Representatives that aimed to impose a 90 percent tax on
bonuses for certain executives at companies that receive
taxpayer bailouts. That measure appeared to be losing momentum
in the Senate.
The new legislation would allow the Treasury to provide the
guidance on what is unreasonable or excessive, but it would be
limited to only those companies that have received capital
investments from the Treasury's $700 billion financial rescue
"If you've received a capital investment of American tax
dollars...to make it through these extraordinary times, there
should be common-sense limits on bonuses," said Rep. Ed
Perlmutter, a Colorado Democrat. "My constituents in Colorado
don't want their hard-earned dollars going to inflate senior
executives' life rafts as the ship steers close to the rocks."
The pay-for-performance bill and the earlier measure to tax
bonuses are part of a legislative backlash sparked by the March
15 payment by AIG of $165 million in employee retention bonuses
to employees of its AIG Financial Products unit, which made bad
bets on credit default swaps and complex mortgage-backed
securities. The retention payments were decided last year
before the company was rescued by the government to the tune of
nearly $180 billion, but the Obama administration determined
that it was legally bound to make the payments.
The administration has vowed to try to claw back the bonus
payments from AIG, in which the government now owns an 80
Some financial firms have said the prospect of compensation
limits have made them reluctant to participate in the Treasury
program, which could diminish its power to cleanse toxic assets
from banks' books and jump-start lending.
Although 85 Republicans voted in favor of the bonus tax,
Republicans on Wednesday spoke out against the broader
Rep. Roy Blunt, a Missouri Republican, characterized the
bonus tax as a "message" to AIG executives, but said the
government was stepping too far into management territory in
the current bill.
"It is all we can do to run the government," he said. "And
to try to tell these companies how to pay the people that work
for them is not the right thing to do."
The House was expected to consider several amendments to
the measure before final vote on Wednesday afternoon.
(Reporting by David Lawder; Editing by Andrea Ricci)