Riding a wave of populist economic rage, US lawmakers prepared Thursday to punish firms like AIG for giving lavish bonuses to top executives after getting billions of government rescue dollars.
The House of Representatives scheduled a vote on a bill to slap a 90-percent tax on bonuses paid to top executives at bailed-out giants like American International Group, a newly potent political symbol of reckless greed.
"We figured that the local and state government will take care of the other 10 percent," quipped Democratic Representative Charles Rangel, chairman of the tax-writing House Ways and Means Committee.
Turning up the heat, the US government's chief overseer of rescue funds announced an investigation into the AIG bonuses, including what role the US Treasury played in approving the payments.
The announcement by Neil Barofsky, the special inspector-general of the Troubled Asset Relief Program, turned up the political heat on Treasury Secretary Timothy Geithner amid Republican calls for his resignation.
At the US Capitol, US President Barack Obama's Democrats pinned the blame for the awards and the devastating global economic crisis on the shoulders of former US president George W. Bush and his Republicans.
"We have inherited a terrible mess," Democratic House Speaker Nancy Pelosi said, stressing Bush empowered corporate "arrogance and hubris and greed" with a policy of "no regulation, no discipline, no supervision."
"The president has inherited a terrible mess from the Bush administration when it comes to our economy, the jobless rate in our country, the size of the deficit that we have, and the shambles in which financial institutions are left," she told reporters.
But Republicans charged that Treasury Secretary Timothy Geithner could have stopped the AIG bonuses and offered rival legislation requiring him to craft a plan within two weeks to recover or at least freeze the awards.
Republican House Minority Leader John Boehner said the Democratic plan was a "sham" and a "half-hearted" effort that would only get the cash back next year when AIG executives file their taxes.
The Republican plan, which stood little chance of clearing the Democratic-led House, also said AIG could not get more government help until the bonuses are repaid -- raising the prospect the firm could collapse.
The Democratic tax would apply to employees whose total annual pay exceeded 250,000 dollars at firms that received more than five billion dollars in government rescue funds.
Barofsky, who took over in December as the chief overseer of the 700-billion-dollar Troubled Asset Relief Program (TARP), vowed Thursday to "act aggressively to recover the taxpayer's money" if wrongdoing were found at AIG.
"We're launching an audit that, as part of a larger review of executive compensation practices, will include a thorough review of the process through which Treasury decided to authorize and approve such payments," he said.
The probe will cover "who knew what, how, when and why," he told Rangel's committee, arguing that a November agreement between the Treasury and AIG "included specific reference (to) retention payments."
Barofsky said he was also cooperating with a separate investigation by New York state Attorney General Andrew Cuomo and with the Department of Justice into "options available to recover taxpayer money."
Republicans on the House of Representatives subcommittee pressed Barofsky on whether Geithner knew of the impending payouts worth 165 million dollars when he approved an extra 30 billion dollars in bailout money for AIG this month.
"The audit that I announced in my opening statement will have the answer to that question, whether he knew," the inspector-general said.
AIG informed the US Federal Reserve three months ago that it would pay the bonuses on March 15, but the Fed failed to notify Treasury or White House officials for months, The Washington Post reported Thursday.
"I was stunned when I learned how bad this was on Tuesday (March 10)," Geithner told the Post. "I shouldn't have been in that position, but it's my responsibility and I accept that."
Geithner then briefed a senior White House aide, who informed Obama on March 12, the day before they were paid out, the Post reported.
"Listen, I'll take responsibility. I'm the president," Obama said in Costa Mesa, California late Wednesday.
AIG was saved from bankruptcy with an 85-billion-dollar government lifeline in September. The bailout has since mushroomed to more than 170 billion dollars, leaving the taxpayer with an 80-percent stake in the company.
The insurance giant was rescued because the US government believed its intricate web of ties with banks worldwide posed an imminent risk of financial collapse not just for the United States but globally.
Source: AFP American Edition
