The legislation bans compensation arrangements that are excessive and non-performance based bonuses, according to a statement released late yesterday by Frank’s Washington office. Companies would be barred from paying bonuses to employees, regardless of when any agreement was completed, the release said.
“This legislation is needed because it will protect the taxpayer by ensuring that no bonuses, retention or otherwise, will be paid out to executives until the taxpayers are repaid in full,’’ Frank’s spokesman Steve Adamske said in an e-mailed statement.
The legislation builds on efforts in Congress this week to suppress bonus payments at companies that tapped the $700 billion financial rescue legislation lawmakers approved in October. AIG’s payments made after the insurer got $173 billion in U.S. aid, triggering outrage from President Barack Obama and lawmakers and prompting legislation in Congress to tax the bonuses.
The House voted 328-93 yesterday to set a 90 percent tax on bonuses paid to employees of companies that got at least $5 billion in bailout funds. Hours later, four senators proposed a lower 70 percent rate on bonuses at companies getting more than $100 million in aid, affecting a wider pool of workers.
Frank’s legislation would amend the October law and apply to firms that got funds from the bailout and the government-run mortgage-finance giants Fannie Mae and Freddie Mac.
It would ban the companies from paying compensation deemed “unreasonable or excessive" under standards set by the Treasury secretary. It also blocks retention payments, bonuses and other supplemental pay that’s not based on performance-based standards set by the Treasury secretary.