House to vote on bill today

WASHINGTON – U.S. Rep. Bob Etheridge, the only N.C. member of the House Ways and Means Committee, introduced legislation last night to recover federal funds used for bonuses of top executives at financial firms receiving federal aid.  Etheridge is an original cosponsor of the legislation, sponsored by Ways and Means Chairman Charles Rangel.  The House will vote on the bill today.

“Traders on Wall Street should not be able to get rich at the expense of folks on Main Street who are struggling,” said Etheridge.  “Taxpayer funds should not be used to pay bonuses to the very individuals whose excessive risk-taking caused the financial crisis that has harmed thousands of North Carolina families.  When AIG has repaid taxpayers and is footing the bill, it is entitled to award compensation as it sees fit.  However, I cannot allow the company to use taxpayer dollars for its executives greed.”

H.R. 1586, the TARP Bonus Tax Bill, would tax the bonuses of highly paid individuals at a rate of 90 percent if their employer received more than $5 billion in federal assistance through the Troubled Asset Relief Program (TARP).  The legislation only applies to individuals whose total family income exceeds $250,000 per year (adjusted gross income).  It affects bonuses received after January 1, 2009.

The legislation follows American International Group’s decision to award more than $168 million in bonus payments to its top employees.  AIG has received more than $170 billion in emergency federal aid. The company claims that it is contractually bound to pay the bonuses because they were agreed to before Congress passed legislation to limit executive pay for firms receiving federal aid.

Etheridge sent a letter to Treasury Secretary Geithner on Tuesday expressing his outrage and disbelief at AIG’s plans to award the bonuses, asking him to “immediately intervene to suspend the payments.”

By SEAN MUSSENDEN
Media General News Service

WASHINGTON-The House voted Thursday to block President Barack Obama from accessing the second wave of funds from the $700 billion bailout of financial institutions.

Because the Senate killed an identical measure last week, the passage of the bill sponsored by Rep. Virginia Foxx, R-N.C., is unlikely to stop Obama from distributing to ailing banks and foreclosed homeowners the $350 billion remaining in the Troubled Assets Relief Program.

Congress created TARP at the behest of the Bush administration last fall to help thaw frozen credit markets.
The Bush administration’s oversight of the first wave of funds prompted protests by both Republican and Democratic lawmakers after banks held onto the cash instead of lending it and the program was expanded to include auto companies.

Foxx, like many Republicans and some Democrats, opposed the program from the start. She and other early TARP opponents argued that it would reward financial firms that made bad decisions while expanding the deficit, projected to hit $1.2 trillion this year.

“Any money that Congress spends is taken from hardworking Americans paying taxes or is borrowed from foreigners,” Foxx said Thursday while leading debate on the House floor.

The measure was approved 270-155, with all five North Carolina Republicans in the House voting to block the release of the money. North Carolina Democrats were split.

In the Senate vote last week, Sen. Kay Hagan, D-N.C., voted to release the funds, while Sen. Richard Burr, R-N.C., voted to block them.

At this point, only approval of Foxx’s bill by both chambers could block the release of the funds. There is little chance the Senate will bring Foxx’s version up for a vote, because the Democratic majority wants to let Obama access the money.

“This bill is dead…This is an exercise,” Rep. Barney Frank, D-Mass., head of the House Financial Services committee, said before the vote Thursday.

The Obama administration has promised several changes to TARP, including improved disclosure of banks receiving funds and a plan to direct between $50 billion and $100 billion to homeowners facing foreclosure.

“I know there are serious concerns about transparency and accountability… confusion about the goals of the program, and a deep skepticism about whether we are using the taxpayers’ money wisely,” Obama Treasury Secretary nominee Timothy Geithner said at a Senate hearing Wednesday.

The House passed a bill sponsored by Frank on Wednesday that would have written many of those promised changes into law, but Democratic leaders in the Senate have declined to take it up.

Though Frank said the vote on Foxx’s legislation would not stop Obama from using the funds, he said the new president should read it as indication of the public’s dissatisfaction with TARP as written and make the promised changes.

“There is a degree of anger in the American public at what they think is a very unfair system that gives benefits unduly and disproportionately to some who caused the problem,” he said.

Foxx said in an interview that she was troubled by the “lack of accountability” with TARP and hoped the strong vote in the House would convince the Senate to reconsider its decision and bring her bill up for a vote.

“I cannot find where Congress has given the administration a blank check like this. We’re saying, ‘Here’s $350 billion, go to it’,” she said.

How North Carolina House Members Voted

Yes (to block release of TARP funds)
Howard Coble, R
Virginia Foxx, R
Walter Jones, R
Larry Kissell, D
Patrick McHenry, R
Mike McIntyre, D
Sue Myrick, R
Heath Shuler, D

No (to release TARP funds)
G.K. Butterfield, D
Bob Etheridge, D
Brad Miller, D
David Price, D
Mel Watt, D

Highlights of President Barack Obama’s Proposed Changes to TARP
–Direct $50 billion to $100 billion to homeowners facing foreclosure.
–Improve public disclosure of institutions receiving funds.
–Require healthy banks that receive funds to increase lending to businesses and consumers.
–Limit some dividend payments by publicly held companies receiving assistance.
–Prevent firms receiving assistance from using funds to buy other firms.