Since word of the $165 million in AIG bonuses (paid out with federal bailout funds) first broke last week, Congress & the Obama Administration have been exploring what can be done to remedy the situation. On Monday, President Obama pledged to, “pursue every legal avenue to block these bonuses and make the American taxpayers whole.” The first step in the process is to summon those responsible to a battery of congressional hearings.80 percent of AIG is now owned by the federal government thanks to the government bailout. At a House Financial Services subcommittee hearing on Wednesday, Chairman Barney Frank (D) [picture on the left] said, “We should be exercising our rights as owners of this company, 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."
Despite the president's pledge to "pursue every legal avenue", democrats in Washington want a more immediate solution. Most are in favor of passing some kind of legislation quickly to let the voters know that they are aware of the situation and action is being taken. The Senate Finance Committee is proposing new legislation to “discourage excessive compensation by companies that have taken taxpayer funds.” In the House, Reps. Steve Israel (D) and Tim Ryan (D) are proposing the creation of a 100 percent “bailout bonus tax bracket” to recover all taxpayer dollars paid out in bonuses.
Republicans in Congress are citing the AIG scandal as further evidence that the bailout strategy was not the proper response to the economic crisis.
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