Archive for August, 2009
On its way out of town, the House passed the so-called Say-on-Pay bill to restrict bonuses paid to executives of firms that benefited from taxpayer bailouts.
Opponents of the measure said it was an unprecedented infusion of politics into the business world and could cost jobs.
“This bill is an invitation for political meddling at its worst in the private confines of companies that are trying to work hard to create jobs,” complained Rep. Peter J. Roskam (R-Ill.).
The Credit Union National Association and the National Association of Federal Credit Unions were among the business interests that joined in opposing the package. They argued that federal regulators already have power to restrict the size of executive compensation packages.
“Credit unions are being swept up by the wave of trying to punish the bad actors, and we are trying to limit that to the extent possible,” said CUNA Vice President for Legislative Affairs Ryan Donovan. “The Nation Credit Union Administration already has many regulations that restrict packages of this kind,” he added.
Also opposed: The National Association of Manufacturers, the U.S. Chamber of Commerce and the Business Roundtable.
Responding to anger over seven figure executive bonuses paid to companies receiving bailout funds, the House voted largely along party lines, 237-185, to give shareholders a greater say in determining compensation packages and to insure committees that help determine compensation levels have no ties to the companies or executives.
But the bill goes farther by telling companies they cannot offer incentives to employees who make investment decisions that are potentially lucrative, but also have the potential to harm the economy or the financial well-being of the company.
While the White House said the bill “would use the power of public opinion to dissuade outlandish salaries,” it also said rules should not stand in the way of profitable investment decisions.
“I think the president has and continues to believe that we the American people don’t begrudge…people making money for what they do, as long as…we’re not basically incentivizing wild risk taking that somebody else picks up the tab for. I think that’s what the president wants to make sure changes,” said White House Press Secretary Robert Gibbs.
The House action came shortly after a report from the New York state attorney general’s office that said nine banks that were the recipients of bailout funds gave bonuses to executives of $1 million or more.
The report said, for example, that Citigroup received $45 billion in federal money and rewarded 738 employees with bonuses of $1 million or more last year. Insurance giant American International Group Inc. gave similar bonus after the government’s $182 billion bailout.
Republican members of the House Financial Services Committee charged in a letter before the vote that the bill had not been subject to adequate review by House members. “It does these members a disservice to ask them to consider this legislation without the benefit of a hearing and an opportunity to understand what they are voting on,” the letter said.
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The House fled Washington for its August recess, leaving unresolved a massive health care reform package that has for months been President Obama’s cornerstone issue.
“It’s still completely in chaos,” on lobbyist said of the measure, which was being hammered out in three House and two Senate committees. The White House had hoped for floor votes in both houses of Congress before the recess, but appeared satisfied with the progress made so far.
“You’ll have the three committees of jurisdiction in the House that will have all approved a piece of legislation which, obviously, is a positive, a big positive step forward and gets us even closer to comprehensive health care reform,” said Robert Gibbs, the White House press secretary.
“There are elements of this legislation that we think are laudable, and we’re waiting and hoping that the Senate Finance Committee will continue to work on a bipartisan basis to move their legislation forward so that, again, we can get something done here in the fall,” Gibbs said.
House Speaker Nancy Pelosi (D-Calif.) said the break will give members a chance to return to their districts to collect input from their constituents on the various works in progress. “The American people will have a chance to see what’s in it for them, and our members will have a chance to discuss this with their constituents,” she said.
Republicans sent their members home with encouragement to rally opposition to the measure: “The legislative battles we have engaged in over these last several months will be waiting when we return,” Rep. Mike Pence (R-Ind.), chairman of the House Republican Conference, wrote in a memo to all GOP members.
Among the most contentious issues in the mammoth package is the so-called public option that would set up a government run health insurance system for those who cannot otherwise obtain coverage. Republicans oppose the public option, charging it will unfairly compete with private insurers.
The bill also likely will require employers to provide health care coverage for their workers, or face a tax based on the size of their payrolls. Controversy also surrounds provisions that would tax the health care coverage of the wealthiest Americans.
The measure would provide assistant to help low and middle income American’s pay for health insurance and a mechanism to control of the cost of prescription drugs.
Much of the haggling in recent days has been over ways to cut the cost of the package, estimated by the Congressional Budget Office at $1 trillion or more. Lawmakers on both sides of the Hill now say the measure will come in well below the $1 trillion threshold.