Thursday, March 19, 2009

In House, Anger Over A.I.G. Bonuses Turns Partisan

In House, Anger Over A.I.G. Bonuses Turns Partisan

Published: March 19, 2009

WASHINGTON — Democrats and Republicans tried to outdo one another in voicing anger and indignation on Thursday as the House debated a bill to punish executives of the American International Group who got big bonuses while the federal government was bailing out their foundering company.

"The people have said 'no,' " Representative Earl Pomeroy, Democrat of North Dakota, shouted on the House floor. "In fact, they said 'hell no, and give us our money back.' "

"Have the recipients of these checks no shame at all?" Mr. Pomeroy continued. Summing up his personal view of the so-far anonymous A.I.G. executives, he said: "You are disgraces, professional losers. And by the way, give us our money back."

Republicans were not to be outdone in expressing disgust, and they had a collective "I told you so" message for Democrats. Representative Ed Royce of California, for instance, said he would vote for the bill on the floor, but he proudly recalled that last fall he had voted against the Troubled Assets Relief Program, the bailout plan that is the source of mounting public fury.

Other Republicans signaled that they would vote "no" and would line up instead behind a countermeasure that Representative John A. Boehner of Ohio, the minority leader, said would recover the taxpayers' money much faster.

Representative Judy Biggert, Republican of Illinois, said that while virtually everyone agrees that the A.I.G. executives should not be getting bonuses for failing, it would be a mistake for the House to rush through a piece of legislation. If that happened, she said, there could be regrets later, as there are now over the TARP bill, "made public in the dead of night, just hours before the vote."

The bill being debated on Thursday, which would need a two-thirds majority vote to pass because it was being considered under a suspension of House rules, was offered by Representative Charles B. Rangel, the New York Democrat who heads the House Ways and Means Committee. It would take 90 percent of the A.I.G. bonuses back in federal taxes. It would apply to bonuses paid since Jan. 1 by A.I.G. or any other company accepting more than $5 billion in bailout money.

"This is not going to happen again," Mr. Rangel said. "The light is flashing and letting them know that America won't take it."

But Mr. Boehner was disdainful of Mr. Rangel's proposal, calling it "a sham" and urging adoption of a bill to get back the bonus money at once. The $165 million in bonuses has spawned rage in part because it was paid to executives in the very unit of A.I.G. that arguably turned a stable, prosperous insurance company into a dice-rolling financial firm in search of quick profits.

The Democrats have a 254-to-178 advantage in the House. Assuming that every member votes, 288 "yes" votes would be required to pass either Mr. Rangel's or Mr. Boehner's proposal.

The Republicans said their measure would get back all of the bonus money, not just most of it.

And they said it would do so within two weeks, as opposed to the year or so that the Democrats' bill would take — assuming, that is, that the A.I.G. executives filed honest tax returns.What's more, Republicans asserted, the Democrats are mostly responsible for the A.I.G. bonus debacle, since Senator Christopher J. Dodd of Connecticut, chairman of the Senate Banking Committee, inserted language in President Obama's economic stimulus package — not to be confused with the TARP legislation, passed in the waning days of the Bush administration, by the old Congress — to exempt bonuses granted by contract before Feb. 11 from general restrictions on bonus payments.

Mr. Dodd has said the Treasury Department insisted on the exemption in final negotiations on the stimulus legislation. Republicans have been calling the provision a "dark of night" or "dead of night" deed, as Ms. Biggert did. Some Republicans have also been offering reminders that not one of them in the House voted for President Obama's stimulus program.

Of course, it is not uncommon for complicated legislation to go through Congress with sections that escape detailed initial scrutiny. And when the lawmakers considered President Obama's economic stimulus package they no doubt recalled that, on the day last fall when the TARP legislation initially stalled in the House, the stock market plunged..

While the House was debating, Sheila Bair, the chairwoman of the Federal Deposit Insurance Corporation, was testifying before Senator Dodd's banking panel. She told the senators that the idea of bailing out institutions considered "too big to fail" was unsatisfactory.

Mr. Dodd agreed. One lesson to glean from the current crisis, he said, is that "no institution should ever be 'too big to fail.' "


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Peter S. Lopez aka: Peta

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