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Lawmakers target 'outrageous' AIG bonuses

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“We ought to bring lawsuits to say: These people performed so badly, the magnitude of the losses are so great, that we are justified in rescinding the bonuses,” he said.

With the government bailout, AIG is now 80 percent owned by the federal government.

On Monday, President Obama pledged to “pursue every legal avenue to block these bonuses and make the American taxpayers whole.”

But Democrats on Capitol Hill want a quicker flexing of legislative muscle to show voters that they get it.
After disclosure of the AIG bonuses last weekend, lawmakers rushed to draft a legislative remedy to recapture those bonuses for taxpayers.

First off the mark, the Senate Finance Committee is proposing new legislation to “discourage excessive compensation by companies that have taken taxpayer funds.”

They also propose recouping payments to executives at AIG and other institutions that have received taxpayer funds from the Troubled Assets Relief Program.

The proposal includes a 35 percent excise tax on all retention bonuses and all other bonuses over $50,000. The provisions would apply to all TARP recipients of government funds as well as companies in which the government holds an equity interest, including Fannie Mae and Freddie Mac.

On the House side, Democratic Reps. Steve Israel of New York and Tim Ryan of Ohio propose creating a 100 percent “bailout bonus tax bracket” to recover all taxpayer dollars paid out in bonuses.

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