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WASHINGTON – 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.
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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.
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