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.
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.
"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.
The House proposal's hefty tax provision would apply to executives with incomes over $250,000 who work for companies that get at least $5 billion in federal aid. That could include others besides AIG, such as mortgage financing company Fannie Mae.
"The whole idea that they should be rewarded millions of dollars is repugnant to everything that decent people believe in," said Representative Charlie Rangel, the Democratic chairman of the tax-writing Ways and Means Committee.
In a measure of the widespread outrage over bonuses, small crowds of protesters marched in cities across the United States to denounce the idea that AIG employees who helped push the insurer to the brink of collapse should be rewarded for it.
In New York, Cuomo said he had details in hand on who received the bonuses at AIG.
He also said Bank of America Corp was expected to hand over the names of the 200 top bonus earners at Merrill Lynch & Co from last year, another potential embarrassment for the bailout process.
Goldman Sachs Group Inc plans to respond publicly to what it described as misperceptions about its trading relationship with AIG after it was paid $12.9 billion by AIG from bailout funds.
Amid the furor, some Senate Republicans urged a slower approach to trying to claw back bonus payments.
"Until we have hearings and we understand all this, we are not going to know what kind of fix to implement," Kyl told reporters.
Additional reporting by Thomas Ferraro, Glenn Somerville and Grant McCool; Editing by Andre Grenon