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House Threatens to tax each AIG employees bonus (1936 hits)

I am getting a very uncomfortable feeling about how we as a community respond to issues in government. What? you are too busy with nickel and dime wealth building
schemes that lead to time wasted and a mindset of what's the use? evidently some folks "just don't get it"!

We as a people have the right to petition our government. We don't have a town crier that stands in front of the Capitol and reads our concerns, we have the internet.

The voice of a people is measured by how many of us sign a petition. Today it's done on the internet. Will you please support our President in real measurable terms? This story is out now, even Congress is saying this bailout is ridiculous, why would we not want to be a voice in support?

AP – Senate Banking Committee Chairman Sen. Christopher Dodd, D-Conn., left, and the committee's ranking Republican … WASHINGTON – Senate Democrats vowed Tuesday to all but strip AIG executives of their $165 million in bonuses, as expressions of outrage swelled in Congress over eye-catching extra income for employees of a firm that has received billions in taxpayer bailout funds.

"Recipients of these bonuses will not be able to keep all of their money," declared Senate Majority Leader Harry Reid, in an unusually strong threat delivered on the Senate floor.

"If you don't return it on your own we will do it for you," said Chuck Schumer of New York.

The bonuses were paid legally, part of a program that had been disclosed in advance in filings that American International Group Inc. made with the government.

Senate Democrats threatened to tax the bonuses at up to 91 percent through narrowly written legislation, said Schumer, if AIG does not return the money voluntarily. Republicans have said President Barack Obama should have done more to prevent the executives from accepting the bonuses in the first place.

Senate Finance Committee Chairman Max Baucus asked, "What is the highest excise tax we can impose that will stand up in court? Let's find out what it is."

In the House, Reps. Steve Israel, D-N.Y., and Tim Ryan, D-Ohio, introduced a bill that would that would tax at 100 percent bonuses above $100,000 paid by companies that have received federal bailout money.

"It boggles my mind how these executives can be so unaware of what the American people are going through," said Ryan. He called his proposal "a wakeup call that the days of arrogance and greed on Wall Street are coming to an end. We will use any means necessary."

The Internal Revenue Service currently withholds 25 percent from bonuses less than $1 million and 35 percent for bonuses more than $1 million.

As outrage over the American International Group Inc. bonuses rose across the political spectrum, the Obama administration said it was trying to put strict limits on how future government bailout dollars could be used. But sharp questions have been raised about what the administration knew about the bonuses — and when.

Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee, chastised the administration, saying Treasury Secretary Timothy Geithner should have blocked the payouts.

"I don't know if he should resign over this," the Alabama senator said. "He works for the president of the United States. But I can tell you, this is just another example of where he seems to be out of the loop. Treasury should have let the American people know about this."

AIG also was raked over the coals at a banking committee hearing on regulating the insurance industry.

"One way or another, we're going to try to figure out how to get these resources back," said Christopher Dodd, D-Conn., the panel's chairman.

"This is ridiculous," exclaimed Sen. Jon Tester, D-Mont. He said AIG executives "need to understand that the only reason they even have a job is because of the taxpayers."

Edward Liddy, the CEO of American International Group Inc., is to testify Thursday before a House subcommittee.

On Monday, President Barack Obama lambasted the insurance giant for "recklessness and greed" and pledged to try to block payment of the bonuses. Obama said he had directed Geithner to determine whether there was any way to retrieve or stop the bonus money.

The financial bailout program remains politically unpopular and has been a drag on Obama's new presidency, even though the plan began under his predecessor, President George W. Bush. The White House is aware of the nation's bailout fatigue; hundreds of billions of taxpayer dollars have gone to prop up financial institutions that made poor decisions, while many others who have done no wrong have paid the price.

Sen. Charles Grassley suggested in an Iowa City radio interview on Monday that AIG executives should take a Japanese approach toward accepting responsibility by resigning or killing themselves.

"Obviously, maybe they ought to be removed," the Iowa Republican said. "But I would suggest the first thing that would make me feel a little bit better toward them if they'd follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide."

Grassley spokesman Casey Mills said the senator wasn't calling for AIG executives to kill themselves, but said those who accept tax dollars and spend them on travel and bonuses do so irresponsibly.

New York Attorney General Andrew Cuomo said he has issued subpoenas for the names of AIG employees given bonuses despite their possible roles in its near-collapse. Cuomo said his office will investigate whether the bonus payments are fraudulent under state law because they were promised when the company knew it wouldn't have the money to cover them. AIG reported this month that it lost $61.7 billion in the fourth quarter of last year, the largest corporate loss in history, and it has benefited from more than $170 billion in a federal rescue.

Posted By: Marta Fernandez
Tuesday, March 17th 2009 at 12:50PM
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How does a company lose 61.7 billion dollars and then turn around and give out millions in bonuses? That is the most absurd thing I 've ever heard. Greed has gotten to their mind, they can't help it, they need help. Someone send me to Washington tomorrow so I can slap some sense into them. This calls for drastic measure. I don't mind, I'll go. Shoot, I haven't had a change to release stress in a long time. Please send me.
Tuesday, March 17th 2009 at 1:14PM
Hey Vernell--glad to see you are fired up! on Obama's page there is some information as to how to get involved--www.barackobama.com, thanks for all of your comments,some of us walk with power, some of are dead politically!
Tuesday, March 17th 2009 at 1:20PM
Marta Fernandez
Unless the tax is 11000.000 % whats the use?
Tuesday, March 17th 2009 at 3:29PM
The use is to educate yourself--come out of the $50,000.00 mentality and try to understand the 50 million, 50 billion and 50 trillion--"get 'it'!
Tuesday, March 17th 2009 at 8:43PM
Marta Fernandez
Here’s some background on this issue I’ve discovered:

1. These suddenly sacrosanct contracts these AIG employees had will probably be found to fraudulent if held to legal scrutiny. They were written at a time when a case could be made that they knew disaster was soon to strike, and that their performance would be poor. Its bad enough that they insisted on this but what’s worse, they demanded and got the contract to pay them in accordance with 2007 bonus rates, which were based on the bubble profits at the time, and totally unrealistic even then.
2. These contracts were known going back to when AIG was first scheduled to get the bailout funds last fall, before the election. Republicans in congress insisted that these contracts be left as they are, as a condition for passing the TARP bill.
3. The CEO of AIG, Edward Liddy, was appointed by Bush.
4. The lions share of the $165 million in bonuses (this figure seems to change every day) goes to the people in AIG’s Financial Products division. Ten people in this group are splitting $42 million in bonus, with the top payout $6.7 million.

I don’t like the tax idea for two reasons. First, it relies on changing tax lies to target specific individuals. That might not pass Constitutional muster. It will also take time to get this in place. Second, it makes democrats, and Obama, politically vulnerable to the charge from the right that, just like we accuse them of using tax cuts to solve everything under the sun, they will now accuse dems of using tax increases to do the same thing. Sure, its not an equivalent argument, but with the media on their side it doesn’t matter.

A better idea would be to deduct that bonus money from the $30 billion dollar payment AIG has coming. I would deduct that money, plus a penalty. I would also then go after those contracts. To make sure nothing like this could happen again. Then I’d put them on notice: with what amounts to an 80% stake in the company, the government does have some say as to how resources are used, and will do so from here on.

Lastly, Geihtner needs to be dealt with. I understand he’s “new’ however he did work with former Treasury secretary Paulson under Bush, and was well aware of these contracts. He called himself negotiating a deal wherein the bonuses would be scaled back by 30%. Best case that was an error of political tone deafness. At worst, it was the old Wall Street cronyism welling up in him; the same cronyism that has Paulson and a lot of these other people involved with the government making policy with an eye towards feathering the nests of their buds. Obama can’t fire Geihtner, but I would sure take him to the woodshed; seriously.

Wednesday, March 18th 2009 at 8:34AM
Whew Clark, keep learning me something. Thanks Marta for posting good stuff.....:) peace and love to all.
Wednesday, March 18th 2009 at 9:07AM
agnes levine
Clark? lets' go to D.C.? after you finished with them we would both get a check!
Wednesday, March 18th 2009 at 7:01PM
Marta Fernandez
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