Open

Coming up

Don't miss

Replay


LATEST SHOWS

MEDIAWATCH

No strategy and a beige suit

Read more

THE WORLD THIS WEEK

The World This Week - 29 August 2014 (part 2)

Read more

THE WORLD THIS WEEK

The World This Week - 29 August 2014

Read more

ENCORE!

Alain Choquette: A Hilarious Magician in Paris

Read more

FOCUS

France welcomes Iraqi Christian refugees

Read more

FRANCE IN FOCUS

Emmanuel Macron: A new economy minister with a pro-business agenda

Read more

THE OBSERVERS

More of this year's best Observers stories

Read more

#TECH 24

Changing the world, one video game at a time

Read more

IN THE PAPERS

Socialist Party summer conference kicks off in explosive atmosphere

Read more

  • Kerry calls for 'coalition of nations' to battle IS militants

    Read more

  • EU leaders meet in Brussels to seek a response to Russia

    Read more

  • Exclusive: Fabius warns Russia of more sanctions

    Read more

  • IMF stands behind Lagarde amid French corruption probe

    Read more

  • Ebola drug ‘ZMapp’ heals all monkeys in study

    Read more

  • British killer escapes from French psychiatric hospital

    Read more

  • Police hunt for British boy with brain tumour taken to France

    Read more

  • Ukraine to relaunch NATO membership bid

    Read more

  • Suriname leader’s son pleads guilty to courting Hezbollah

    Read more

  • Mapping Ukraine: Canada and Russia in ‘tweet for tat’ row

    Read more

  • France shines in IMF list of world’s promising economists

    Read more

  • Chelsea’s Torres set for AC Milan switch

    Read more

  • First case of Ebola confirmed in Senegal

    Read more

  • Obama has 'no strategy yet' against IS militants in Syria

    Read more

  • Netflix to woo French with ‘House of Cards’ set in Marseille

    Read more

  • French businesses ‘hoping for a new Thatcher’

    Read more

  • The deleted tweets of Manuel Valls

    Read more

  • Libyan PM resigns as Islamists set up rival administration

    Read more

  • Syrian refugees surpass three million, UN says

    Read more

  • UN says 43 peacekeepers captured in Golan Heights

    Read more

  • Peru seizes record 6.5 tonnes of Europe-bound cocaine

    Read more

Business

House passes 90% tax law on AIG-like bonuses

Video by Rachel MARUSAK

Latest update : 2009-03-20

The US House of Representatives has adopted a law calling for a 90 % tax on bonuses at bailed-out firms like AIG. Lawmakers voted 328-93 in favour of the legislation as the furore against the huge bonuses awarded to AIG executives remains.

Reuters - The U.S. House of Representatives swiftly passed a bill on Thursday to recoup controversial bonuses paid to American International Group 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. For more, see: [ID:nN19428263]

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 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.

Date created : 2009-03-19

COMMENT(S)