Wyden-Snowe Amendment Will Recover Taxpayer Dollars Paid-Out as Wall Street Bonuses
Washington, D.C. - Financial institutions that used "federal bailout" funds to pay employees bonuses in excess of $100,000 will be required to compensate taxpayers under a provision that will be introduced today by U.S. Senators Ron Wyden (D-Ore.) and Olympia Snowe (R-Maine). The provision - which the Senators will offer as an amendment to the American Recovery and Reinvestment Act of 2009 - will require financial institutions that received funds from the Troubled Asset Relief Program (TARP) to either repay the cash portion of any bonus paid in excess of $100,000 early - within 120 days of the amendment's enactment - or face an excise tax of 35% on what is not immediately repaid to the treasury.
"It's not enough to say these bonuses are wrong - they must be paid back," said Wyden. "To get our economy moving again, the American people must regain confidence in their financial institutions. Protecting taxpayers with this amendment is a strong start."
"The flawed framework of the first financial rescue package enacted by Congress left open the escape hatch of golden parachutes for top executives on Wall Street - the same individuals whose careless mistakes hurt the financial system and forced taxpayers to foot the bill in the first place," said Senator Snowe, a member of the Senate Finance Committee. "By requiring the firms to return TARP funds used to pay big bonuses, this amendment insists on strong taxpayer protections and guarantees that no tax dollars be used to prop up Wall Street executives."
The Wyden-Snowe amendment will work in conjunction with the Treasury Department's new guidelines on executive pay for financial institutions receiving TARP funds, by applying to bonuses paid for work in 2008. In 2008, financial institutions received more than $274 billion through TARP, while paying out an estimated $18.4 billion in employee bonuses, which is roughly the same amount paid out in 2004 when the Dow Jones industrial average was over 10,000.