Senate quietly stripped measure restricting bonuses from bailout legislation

John Byrne
Published: Wednesday March 18, 2009

A new revelation in the scandal surrounding AIG’s decision to pay multi-million dollar bonuses to executives — a provision that would have restricted companies receiving federal government bailout aid from paying bonuses was quietly stripped from a bill last month.

The measure, introduced by Sen. Ron Wyden (D-OR), was removed by negotiators in a late-night, close door meeting. In the negotiations, senators agreed to limit executive compensation but decided to forgo barring excessive bonuses — in fact, they specifically exempted it.

Senate Majority Leader Harry Reid (D-NV) (above right) dodged a question about the decision when asked by a reporter.

“I’m wondering sir, if that was a mistake by Democrats to drop that and you wish you hadn’t at this time?” the reporter asked.

“I think we should look at what we did put in the bill,” Reid replied. “We did put the Dodd language.”

In an interview with The Huffington Post, Sen. Wyden bemoaned the removal of his bonus-limiting provision.

Senator Ron Wyden said on Tuesday that the furor surrounding AIG’s bonus payments could have been avoided had the Obama White House and members of Congress simply backed legislation that he and Sen. Olympia Snowe introduced more than a month ago.

In an interview with the Huffington Post, the Oregon Democrat noted that during the crafting of the stimulus package, he and his Republican colleague from Maine introduced a provision that would have forced bailout recipients to cap their bonuses at $100,000. Any amount paid above that would have been taxed at 35 percent. The language made it through the Senate, but during conference committee with the House, it was inexplicably removed.

“The reality is, had that legislation been passed it would have been a very strong disincentive to anybody paying out bonuses in the future,” said Wyden. “Earlier, the President had denounced those bonuses that came at the end of the year. And when Senator Snowe and I said it is not enough for those in elected office to say it was wrong, that they have got to have a plan to have them pay it back, we were able to get legislation through the United States Senate. Not a single United States Senator was willing in broad daylight to stand up and oppose our bipartisan amendment… but it died in conference.”

Looking back, Wyden laments the missed opportunity, saying that it remains unclear who got the language stripped — “it didn’t die by osmosis.”

More of Wyden’s interview can be read here.

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