Etheridge votes to reclaim AIG bonuses


Washington, D.C. -— U.S. Rep. Bob Etheridge, the only N.C. member of the House Ways and Means Committee, today voted to pass legislation to recover federal funds used for bonuses of top executives at financial firms receiving federal aid.

Etheridge is an original cosponsor of the legislation, sponsored by Ways and Means Chairman Charles Rangel. The House approved the bill 328 — 93 and the Senate must now pass it for it to become law.

“Taxpayer funds should not be used to reward the individuals whose excessive risk taking caused the financial crisis that has harmed the livelihood of North Carolinians,” said Etheridge. “Traders on Wall Street should not get rich at the expense of folks on Main Street who are struggling.”

“If AIG will not halt these bonuses, and if its employees will not voluntarily turn them down, then this bill will ensure that the money is returned to the taxpayers. I regret having to use the tax code in this manner, but the blatant abuse of taxpayer dollars by AIG leaves us with no other choice. This bill will send a message not only to AIG, but to other companies receiving taxpayer aid, that this behavior is unacceptable.”

H.R. 1586, the TARP Bonus Tax Bill, would tax the bonuses of highly paid individuals at a rate of 90 percent if their employer received more than $5 billion in federal assistance through the Troubled Asset Relief Program (TARP). The legislation only applies to individuals whose total family income exceeds $250,000 per year (adjusted gross income). It affects bonuses received after January 1, 2009.

The legislation follows American International Group’s decision to award more than $168 million in bonus payments to its top employees. AIG has received more than $170 billion in emergency federal aid. The company claims that it is contractually bound to pay the bonuses because they were agreed to before Congress passed legislation to limit executive pay for firms receiving federal aid.

Etheridge sent a letter to Treasury Secretary Geithner on Tuesday expressing his outrage and disbelief at AIG’s plans to award the bonuses, asking him to “immediately intervene to suspend the payments.”