Washington, D.C. - U.S. Senator Sheldon Whitehouse (D-RI) wrote today to Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers to convey Rhode Islanders' anger over AIG's recent payment of $165 million in bonuses after the company had received billions in federal aid.
"As I travelled across Rhode Island this past weekend, I was greeted at every stop by constituents enraged over AIG's recent payment of $165 million in bonuses to the very scoundrels in its financial products division that brought the company to the brink of collapse and helped bring about our current economic woes," Whitehouse wrote.
"I too am outraged and believe that the Administration must take forceful action to convey to AIG and other firms that received federal assistance during our economic downturn that such indefensible excesses will not be tolerated. This action should include efforts to abrogate the contracts between AIG and its executives under which these payments were made."
Earlier this year, Whitehouse introduced legislation to help taxpayers recoup billions of dollars in deferred pay already on the books at banks that receive, or have already received, taxpayer assistance under the federal bailout program. Nothing in the original Troubled Asset Relief Program (TARP) prohibits firms from using bailout funds to pay deferred compensation or vested bonuses to their executives, and because taxpayer support is helping keep these firms afloat, Whitehouse's legislation would, in effect, enable the government to reduce these obligations to reasonable levels as a condition of its participation in the TARP.
The Economic Recovery Adjustment Act of 2009 (S. 431) would create a Temporary Economic Recovery Oversight Panel to examine and readjust, at the government's request, the executive compensation obligations of TARP participants. A due process hearing would give the reductions finality equivalent to a bankruptcy order.