March 27, 2009
Instead, they are proposing a "gentler" system*.
Just what is unreasonable or excessive would be determined by financial regulators and the Treasury Department, where Secretary Timothy Geithner set off a public furor by not blocking $165 million in AIG payments to its financial products executives and traders on March 15.
The Senate, meanwhile, has put on hold a bill that Democrats unsuccessfully tried to advance last week. It would tax away about 70 percent of the employee bonuses at AIG and other companies getting more than $100 million in bailout money.
Since last fall, AIG has received or been promised more than $182 billion of government money, much of it funneled to investors and foreign banks who held high-odds bets with the company on the U.S. housing market collapsing.
The about-face came as it become clear that financial institutions would not partner with the government on new efforts to restore vital credit flows to businesses and consumers if it meant later being demonized for its use of taxpayer dollars.
Geithner proposed on Monday a new government program that would rely on the help of private investors to buy up to a $1 trillion of bad debt, or "toxic assets," sitting on the books of major banks, giving them more ability and incentive to lend.
"I don't want people to think that businesses and people who have worked hard, performed well and received bonuses are going to be painted with the AIG brush," House Speaker Nancy Pelosi, D-Calif., told reporters Thursday.
The gentler approach is in stark contrast to the anti-Wall Street rhetoric that consumed Congress and the White House last week after the bonus payments by AIG, the prime example of a company deemed "too big to fail" because its collapse could create a worldwide run on banks and other financial institutions.
The bonus payouts ignited populist anger that four days later prompted the House to vote 328-93 to tax them away and Obama to declare on Jay Leno's late-night talk show the same day that he was "stunned" and would "do everything we can to get those bonuses back"
By the next day, the Senate's bonus tax plan had stalled.
*Insert your own crude and sexual reference about the Government being "gentler".
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