Senate plans on introducing bill to claw back AIG bonuses
Update at bottom: Geithner says he told Dodd to insert loopholeReacting to the pubic outrage over the news that executives responsible for AIG's near collapse last year will be receiving millions in bonuses, Senate Majority Leader Harry Reid said legislation will be introduced this week to return some of the company's bailout money to the Treasury Department.
The Associated Press has reported that Reid said Tuesday Sen. Max Baucus, chairman of the Senate Finance Committee "will issue a proposal in the next day or so that would require American International Group Inc. to return to government at least a portion of the $165 million in bonuses that the insurance giant paid out to executives last week."
Sen. Chris Dodd (D-Conn.), chairman of the Senate Banking Committee on Monday suggested the idea of taxing AIG bonus recipients so the government could claw back the $165 million the company is paying in bonuses to members of its financial products unit, reports FOX Business.
"One way or another, we're going to try to figure out how to get these resources back," said Dodd at a banking committee hearing.
His idea has already caught on throughout Congress and been taken up by House Rep. Carol Maloney (D-NY) among others.
What Dodd isn't talking about though, is the fact that he now has to undo the work he did last month protecting executive bonuses.
FOX Business reported that "while the Senate constructed the $787 billion stimulus last month, Dodd unexpectedly added an executive-compensation restriction to the bill. That amendment provides an 'exception for contractually obligated bonuses agreed on before Feb. 11, 2009,' which exempts the very AIG bonuses Dodd and others are seeking to tax. The amendment is in the final version and is law."
Geithner takes full responsibilityOn Thursday, Treasury Secretary Tim Geithner admitted on CNN that Dodd inserted the loophole at his department's request.
Geithner told CNN's Ali Velshi that the Treasury Department was particularly concerned the government would face lawsuits if bonus contracts were breached and that he took full responsibility for the situation.
On Wednesday, Dodd denied having anything to do with the loophole but later admitted that he did insert it, but only at the behest of the Obama administration.
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