ANGER OVER the use of federal bailout funds by financial institutions rose to a new pitch in Washington yesterday when a key Democratic congressman revealed that at least 13 bailed-out companies owed more than $220 million in back taxes.
Georgia’s John Lewis, chairman of a subcommittee overseeing the bailout, said that two firms owed more than $100 million each. “This is shameful. It is a disgrace. We are going to get to the bottom of what is going on here,” he said. “If we looked at all 470 recipients, how much would they owe?”
The revelation came as the Democrat-controlled US House of Representatives passed legislation to recoup most of the $165 million in retention bonuses paid to AIG employees.
Responding quickly to public outrage over the bonuses after the giant insurer received government bailouts of up to $180 billion, the House voted 328-93 to approve a 90 per cent tax on bonuses for some executives at companies getting federal aid.
The tax would apply to executives with incomes over $250,000 who worked for companies that got at least $5 billion in government aid. That could ensnare others getting federal help, such as mortgage financing company Fannie Mae.
House Ways and Means Committee chairman Charlie Rangel said the punitive tax rate would apply to bonuses paid since the start of this year by AIG, or any other company. “This is not going to happen again,” he said. “The light is flashing and letting them know that America won’t take it.”
Democrats and Republicans have both expressed outrage over AIG’s payout of $165 million in bonuses this week, despite the company’s disastrous performance and its acceptance only two weeks ago of $30 billion more in bailout money.
AIG chairman and chief executive Edward Liddy has asked employees to return at least half of the bonuses, but he told congressmen this week that he cannot force them to do so.
“Have the recipients of these cheques no shame at all?” asked North Dakota Democrat Earl Pomeroy on the House floor yesterday. “You are disgraces, professional losers. And by the way, give us our money back.”
Republicans blame Democrats in Congress and the Obama administration for failing to block the bonuses before they agreed to give AIG its latest tranche of bailout funds. Republican leaders said the Democrats’ effort to tax the bonuses at 90 per cent was “obviously a transparent attempt to divert attention away from the truth that Democrats in Congress and this administration made these bonus payments possible.”
