/ March 18, 2009

Obama Urges All Legal Means To Trump AIG Bonuses; Lawmakers Look Into Tax Code

Obama told Treasury Secretary Timothy Geithner to take all legal measures to block hefty bonuses awarded to employees of AIG.

“The president told Secretary Geithner… to take every legal means that he has to push back against this, to figure out who put this in the contracts and when, and to make sure this doesn’t happen again,” said  Austan Goolsbee, a member of Obama’s Council of Economic Advisers.
AIG received close to $180 billion in bailout money and is is now 80 percent owned by the federal government. Breaking contracts, even for a firm mostly owned by the government, would have legal consequences that would echo throughout the banking and judicial systems for many years according to legal experts. Therefore, lawmakers are looking into different options to put a stop to the bonuses.
Finance Committee Chairman, Max Baucus, D-Mont., will release a proposal on AIG within the next 24 hours, and said that he was looking “very closely” at tax options to go after the bonuses, indicating that he may look into imposing an excise tax on the company.
Sen. Charles E. Grassley, R-Iowa, the panel’s ranking member, said he would support Baucus’ efforts. “I want to back you up on looking into that and doing what we can to make sure this doesn’t happen in the future,” Grassley said.
Source: Reuters and CQ Politics

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