Senate quietly stripped measure restricting bonuses from bailout legislation
A new revelation in the scandal surrounding AIG's decision to pay multi-million dollar bonuses to executives -- a provision that would have restricted companies receiving federal government bailout aid from paying bonuses was quietly stripped from a bill last month.
The measure, introduced by Sen. Ron Wyden (D-OR), was removed by negotiators in a late-night, close door meeting. In the negotiations, senators agreed to limit executive compensation but decided to forgo barring excessive bonuses -- in fact, they specifically exempted it.
Senate Majority Leader Harry Reid (D-NV) (above right) dodged a question about the decision when asked by a reporter.
"I'm wondering sir, if that was a mistake by Democrats to drop that and you wish you hadn't at this time?" the reporter asked.
"I think we should look at what we did put in the bill," Reid replied. "We did put the Dodd language."
In an interview with The Huffington Post, Sen. Wyden bemoaned the removal of his bonus-limiting provision.
Senator Ron Wyden said on Tuesday that the furor surrounding AIG's bonus payments could have been avoided had the Obama White House and members of Congress simply backed legislation that he and Sen. Olympia Snowe introduced more than a month ago.More of Wyden's interview can be read here.
In an interview with the Huffington Post, the Oregon Democrat noted that during the crafting of the stimulus package, he and his Republican colleague from Maine introduced a provision that would have forced bailout recipients to cap their bonuses at $100,000. Any amount paid above that would have been taxed at 35 percent. The language made it through the Senate, but during conference committee with the House, it was inexplicably removed.
"The reality is, had that legislation been passed it would have been a very strong disincentive to anybody paying out bonuses in the future," said Wyden. "Earlier, the President had denounced those bonuses that came at the end of the year. And when Senator Snowe and I said it is not enough for those in elected office to say it was wrong, that they have got to have a plan to have them pay it back, we were able to get legislation through the United States Senate. Not a single United States Senator was willing in broad daylight to stand up and oppose our bipartisan amendment... but it died in conference."
Looking back, Wyden laments the missed opportunity, saying that it remains unclear who got the language stripped -- "it didn't die by osmosis."
Meanwhile, the Associated Press reports that the White House knew AIG executives would be paid hefty bonuses well in advance of their self-professed "outrage."
For months, the Obama administration and members of Congress have known that insurance giant AIG was getting ready to pay huge bonuses while living off government bailouts. It wasn't until the money was flowing and news was trickling out to the public that official Washington rose up in anger and vowed to yank the money back.
Why the sudden furor, just weeks after Barack Obama's team paid out $30 billion in additional aid to the company? So far, the administration has been unable to match its actions to Obama's tough rhetoric on executive compensation. And Congress has been unable or unwilling to restrict bonuses for bailout recipients, despite some lawmakers' repeated efforts to do so.
The situation has the White House and Treasury Secretary Timothy Geithner on the defensive. The administration was caught off guard Tuesday trying to explain why Geithner had waited until last Wednesday to call AIG chief executive Edward M. Liddy and demand that the bonus payments be restructured.
The Washington Post, however, says Obama wasn't informed until the day before the AIG bonuses became public.
"Senior White House officials said last night that President Obama did not learn that bonuses worth $165 million were to be paid to executives of American International Group until Thursday, one day before they were issued and two days after his Treasury secretary was informed that the payments were going forward," the Post reported Wednesday.
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