House Speaker Nancy Pelosi (D-CA) just released a statement announcing that her Democrats will offer legislation this week to recoup AIG’s now-infamous executive bonuses. Here’s the statement from her office:
The House committees are considering several actions to recoup taxpayer dollars, such as:
· Authorizing the U.S. Attorney General to recover prior and future excessive compensation payments made by companies, such as AIG, that received federal financial assistance;
· Prohibiting abuse of retention bonuses by companies receiving capital infusions from Treasury; and
· Recouping a substantial portion of the bonuses through special taxation legislation.
Pelosi also noted that “Congress has already passed legislation signed into law by President Obama last month that protects taxpayers from excessive executive compensation.”
But she didn’t mention that Democratic leaders stripped from that legislation a proposal by Sens. Ron Wyden (D-OR) and Olympia Snowe (R-ME) that would have clawed back nearly $58 million in bonuses from AIG.
Democrats in the Senate, meanwhile, are pursuing their own legislative remedy to the AIG bonuses mess. In a letter to AIG CEO Edward Liddy today, Majority Leader Harry Reid (D-NV) and 11 fellow senators warned that they would pass legislation reclaiming the bonuses if the company did not give the money back. Read the full text of the letter below.
Dear Mr. Liddy,
We write today to express our outrage at American International Group’s recently revealed multi-million dollar bonus payments. In these perilous economic times, it is unconscionable for the American taxpayer to find out that the very employees responsible for running the company into the ground have now received “performance-based” awards that are hundreds of times as large as the average American’s yearly salary. If these contracts are not renegotiated immediately, we will take action to make American taxpayers whole by recouping all of the bonuses that AIG has paid out to its financial products unit, which, by all accounts, is primarily responsible for the near-failure of the company and the devastating impact on the global financial markets.
For a company that would not exist anymore but for a $170 billion taxpayer funded rescue, it is simply morally unacceptable to spend $165 million on bonus payments, and especially offensive to spend $450 million over the next two years rewarding the employees that helped fuel the nation’s financial crisis. Given the fact that it was the employees in this unit that brought your firm to the brink of bankruptcy and caused such havoc in the world, rewarding them is not only morally reprehensible, but entirely indefensible on any business grounds. It is the grossest perversion of the idea of a “performance bonus” imaginable. In America, we believe in rewarding success. AIG is attempting to reward the most extreme failure.
We insist that you immediately renegotiate these contracts in order to recoup these payments and make the American taxpayer whole. We stand ready to take the difficult, but necessary step of working to enact legislation that would allow the government to recoup these bonus payments, perhaps by imposing a steep tax– as high as 91 percent–that will have the effect of recovering nearly all of the bonuses that have been paid out since AIG turned to taxpayers for help.
At a time when families across the country are struggling to make ends meet, and hundreds of thousands of Americans are losing their jobs each month, the hubris of this company, and these employees, to demand taxpayer assistance for these bonus payments is simply and plainly unacceptable. We urge you to bring your employees to the table to renegotiate these contracts immediately. We expect that you will report back to Congress on your efforts to recoup these payments in short order. Thank you for your prompt attention to this matter.
Sincerely,
Senators Schumer, Reid, Murray, Akaka, Boxer, Carper, Feinstein, Harkin, Klobuchar, Lincoln, Menendez, Merkley.
