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New York Times, April 2, 2009 article


The New York Times




April 2, 2009

To Chagrin of Republicans, Compensation Bill Passes

WASHINGTON — The House has approved yet another bill to restrict bonuses and compensation at financial firms that have received government bailout money, as Democrats muscled the legislation past angry Republican opposition.

The vote on Wednesday was 247 to 171, with 237 Democrats and 10 Republicans in favor.

Congress has been wrestling with the issue of limiting bonuses ever since a public outcry last month over $165 million in payouts made by the American International Group, the insurance firm, which has received about $200 billion in bailout funds.

Amid the populist furor, the House overwhelmingly approved a near total tax on any bonuses paid since Jan. 1. But that legislation stalled after President Obama expressed misgivings. Senate Republicans also voiced opposition to it.

The bill adopted by the House on Wednesday would bar companies that received a capital infusion from the federal government from paying any bonus or other compensation that is “unreasonable or excessive” as defined by the Treasury, until they had repaid their bailout money to the government.

The companies would also be barred from paying any bonus that was not “directly based on performance-based measures.”

A spokesman for the Senate majority leader, Harry Reid, Democrat of Nevada, said his party would study the House legislation along with other proposals and would decide how to proceed “over the next few weeks.”

Democrats, including Representative Barney Frank of Massachusetts, the chairman of the Financial Services Committee and main author of the bill, said the measure would address pay limits adopted in the economic stimulus plan.

Republicans roundly criticized it, however, as blatant interference by government in the private sector.

The willingness of Republicans to oppose the bonus restrictions seemed to reflect a calculation that the public uproar had mostly subsided and that they would be seen as defenders of the free markets and not as supporters of big Wall Street paydays.

A spokesman for the Republican leader in the House, Representative John A. Boehner of Ohio, said Democrats had pushed a bad bill to make up for their failures to prevent the bonuses at A.I.G. He said the measure would undermine efforts to stabilize the financial system by encouraging companies to pay back their bailout money too quickly.

The debate on the House floor was raucous and frequently acrimonious as lawmakers traded barbs.

“Would our forefathers ever have considered giving the government a say on how much a private citizen earns, a so-called say on pay?” asked Representative Spencer Bachus of Alabama, the senior Republican on the Financial Services Committee.

The bill would require the Treasury secretary, Timothy F. Geithner, to define what constitutes “unreasonable or excessive pay.”

And Representative Tom Price, Republican of Georgia, derisively recited Mr. Geithner’s résumé, saying that nothing in his experience at the Federal Reserve Bank of New York or the Treasury, nor in his educational background as an Asian studies major at Dartmouth College, qualified him to make such decisions.

“What experience does he have in setting compensation?” Mr. Price asked.



A version of this article appeared in print on April 2, 2009, on page B3 of the New York edition.



Copyright 2009 The New York Times Company




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