House Passes Bill Taxing AIG Bonuses

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The Obama administration is talking about getting back those big bonuses paid to executives at the AIG insurance company. But Congress is already taking action. The House passed a measure that would impose a 90 percent surtax on those bonuses. The bill clearly targets AIG, but the measure could affect other companies as well.

STEVE INSKEEP, host:

NPR's business news starts with payback for AIG bonuses.

The Obama administration is talking about how to get back those big bonuses paid to executives at the AIG Insurance Company. But Congress is already taking action. Yesterday, the House of Representatives passed a measure that would impose a 90 percent surtax on those bonuses. The bill clearly targets AIG, but the measure could affect other companies as well. It covers highly paid employees at all companies that have received large government bailouts.

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House Votes To Tax Bonuses At Bailed Out Firms

The House voted overwhelmingly Thursday to impose a 90 percent tax on hefty bonuses paid out to employees of AIG and other companies that accept substantial amounts of government bailout funds.

The bill, which passed 328-93, would impose the surtax on bonuses at companies receiving at least $5 billion in federal aid. Those employees who received bonuses and whose family income exceeds $250,000 would be taxed. The legislation was prompted by public anger over the $165 million in retention bonuses that American International Group recently paid employees even as the troubled insurer took $180 billion in bailout funds.

"We want our money back and we want our money back now for the taxpayers," said House Speaker Nancy Pelosi (D-CA).

A "yes" vote was cast by 243 Democrats and 85 Republicans. The measure was opposed by six Democrats and 87 Republicans.

President Obama said in a statement that the vote "rightly reflects the outrage that so many feel over the lavish bonuses that AIG provided its employees at the expense of taxpayers who have kept this failed company afloat. Now this legislation moves to the Senate, and I look forward to receiving a final product that will serve as a strong signal to the executives who run these firms that such compensation will not be tolerated."

Some Republicans labeled the legislation a legally questionable ploy to paper over Obama administration missteps. But underscoring the politically volatile nature of the bill, a number of Republicans who initially cast "no" votes changed their positions in the closing moments of the vote.

Minority Leader John Boehner (R-OH) called the bill "a political circus."

Treasury Secretary Timothy Geithner has come in for heavy criticism from lawmakers who said he should have stepped in to head off the bonus payments that were made public last week.

Meanwhile, New York state Attorney General Andrew Cuomo said AIG would be taken to court if the company does not provide details of bonus recipients by Thursday.

Cuomo also said he expects Bank of America Corp. to comply with a judge's order to hand over the names of the 200 people who received the biggest bonuses last year at Merrill Lynch & Co. just before the bank bought the brokerage company.

"We will be receiving the Bank of America information today, and when we get it, we will be reviewing it," Cuomo said. "We'll decide where to go from there."

On Wednesday, AIG Chief Executive Edward Liddy told a congressional panel that he asked his company's executives to give back part of the retention bonuses, saying some had already returned all of the money.

But Liddy defended the need for the payments even as he acknowledged that taxpayers' patience was wearing thin.

At the hearing, Rep. Barney Frank (D-MA) said he intended to ask for the names of those who received bonuses. "If Mr. Liddy declines to give us the names, then I will convene the committee to vote a subpoena for the names," he said. "We do intend to use our power to get the names."

Liddy declined to name names out of concern for his employees, citing threats against their safety.

In all, 73 current and former AIG employees were given $1 million or more in what Liddy described as "retention" bonuses.

From NPR staff and wire services

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