Bailout Companies May Compensate Taxpayers

Financial institutions that received federal bailout money and paid large executive bonuses would be required to compensate taxpayers under the economic stimulus bill approved by the Senate.

The $838 billion measure includes an amendment penalizing companies that paid bonuses greater than $100,000 to executives after receiving government rescue funds last year. The amendment would require the companies to repay within four months any portion of the bonus above $100,000 or face an excise tax of 35 percent on the portion of the bonus above $100,000.

The Senate approved the stimulus bill 61-37 on Tuesday, setting up negotiations with the House, which passed a slightly different version last week.

"It should have gone without saying that the bailout money was never intended for employee bonuses, but once again financial institutions have taken advantage of lax regulation and the public trust," said Sen. Ron Wyden, D-Ore., who co-sponsored the amendment with Sen. Olympia Snowe, R-Maine.

"The American people are demanding that these firms get serious about getting our economy back on track," Wyden said. "Congress has to show that it is willing to step in until they get the message."

Snowe, one of just three Republicans to back the stimulus bill, said the financial bailout Congress approved last fall "left open an escape hatch of golden parachutes for top executives on Wall Street, the same individuals whose careless mistakes hurt the financial system and forced taxpayers to foot the bill in the first place."

She said that by requiring the companies to return bailout funds used to pay big bonuses, the government could "claw back" bonuses already paid to senior executives at firms that received money in the final quarter of 2008 from the Treasury Department's Troubled Asset Relief Program, known as TARP.

Snowe and Wyden said their amendment would work in conjunction with the Treasury Department's new guidelines on executive pay for financial institutions receiving TARP funds, by applying strict standards to bonuses paid in 2008. The new guidelines, announced Tuesday, apply to the unspent $350 billion installment of the $700 billion bailout fund.

The Joint Committee on Taxation estimates that the Wyden-Snowe amendment would raise as much as $3.2 billion. Financial institutions received more than $274 billion through the bailout program while paying out an estimated $18.4 billion in employee bonuses last year, the committee said.

[butterflync]

Sure, it sounds good, but you just can''t make up the rules as you go along. Congress should have thought of this when they passed the first bailout. It''s pretty much a no brainer, and as they have proven, they were definitely using no brains when they passed the first bailout!

[sandy19731]

You have to love the lawmakers, they pass a law, it does not work well, they change it and have the IRS do the penalizing.

I am impressed, and yet disturbed.

[tpeks40]

Plain and simple answer if you ask me. There shouldn''t be a "may" involved in the equation. These scumbags need to repay their big bonuses, or no more money.

[tcoleman12]

So, I can expect a dividend check from each of these companies that took bailout money that falls under this criteria? I am a taxpayer...
Actually, the government will receive the money back. The "taxpayer" will never realize the difference in the return other than possibly increased costs from those companies for their goods/services.

[smt451d]

Banks: "We need more bailout money in order to compensate taxpayers."

[culturechang]

The key word is "may". In actuality, they wont. This is all showmanship.

[bm6005]

Good idea, we need more like this. Keep ''em coming!

[coppertales]

So, I am getting a tax refund of 500 bucks. Now, are they going to ammend the tax table for the 2009 taxes showing the reduction in taxes or they going to leave the tax table the same so I will end up paying more in taxes because I don''t have as much witholding.......

[withad-2009]

What I find interesting is that it is going to cost us 11 billion dollars to insure that the bank CEOs honor the salary caps. Wouldn''t an executive order be enough, why do we the taxpayers have to shell out 11 billion to keep them honest.

[gunnyh1]

"[The] Bank of the United States... is one of the most deadly hostility existing, against the principles and form of our Constitution... An institution like this, penetrating by its branches every part of the Union, acting by command and in phalanx, may, in a critical moment, upset the government. I deem no government safe which is under the vassalage of any self-constituted authorities, or any other authority than that of the nation, or its regular functionaries. What an obstruction could not this bank of the United States, with all its branch banks, be in time of war! It might dictate to us the peace we should accept, or withdraw its aids. Ought we then to give further growth to an institution so powerful, so hostile?" --Thomas Jefferson to Albert Gallatin, 1803. ME 10:437