House votes to recoup bonuses from bailed-out firms

By Jeremy Pelofsky and Susan Cornwell

WASHINGTON (Reuters) - The U.S. House of Representatives swiftly passed a bill on Thursday to recoup controversial bonuses paid to American International Group Inc as Treasury Secretary Timothy Geithner tried to calm the furor by taking responsibility.

In the face of public outrage at the fact that AIG paid $165 million in bonuses after receiving $180 billion in government aid, the House voted 328-93 to approve a 90 percent tax on bonuses for certain executives at companies that are getting taxpayer-financed help.

The number two Republican in the Senate, Jon Kyl of Arizona, blocked an initial bid to approve a Senate version of the legislation that would put a 70 percent excise tax on bonuses for employees at companies that have received at least $100 million in bailout aid.

Kyl objected to a request to agree by unanimous consent to pass it, saying more study was needed and putting into question when the Senate might again try to pass the legislation.

'BUBBLE AND BUST'

President Barack Obama urged lawmakers to press on with measures that he can sign into law, calling AIG bonuses a symptom of "a bubble and bust economy that valued reckless speculation over responsibility and hard work."

Meanwhile, U.S. Treasury Secretary Timothy Geithner took some blame for the controversy over the AIG payments, telling CNN Treasury was concerned that trying to squelch bonuses agreed previously might come under legal challenge.

Senator Christopher Dodd, chairman of the Senate Banking Committee, had been scrambling to explain how a tough provision to restrict bonuses got watered down in a recently passed stimulus bill.

In response to questions, Geithner said Treasury staff had expressed concern that provisions originally in the bill that would have prevented bonus payments might not survive a legal challenge.

The U.S. Treasury chief, who has come under criticism for not doing more to stop the AIG bonuses, repeated he only learned "the full scale and scope of these specific bonus problems" on March 10 and conceded he was partly at fault.

WHO'S TO BLAME?

"You know, it's my responsibility, I was in a position where I didn't know about these sooner, I take full responsibility for that," Geithner said.

He dismissed calls for his resignation as something that "just comes with the job."

It is still not widely known who at AIG received the bonus payments, which were supposed to be aimed at keeping highly skilled employees on the job at the troubled insurer.

AIG complied with a subpoena to provide details of bonus recipients to New York Attorney General Andrew Cuomo. But he said his office -- aware of threats made against AIG employees -- would conduct a risk assessment before releasing any names.