Congressman Conyers', Cohen's Bill to Halt AIG Bonuses Passes Judiciary

“I am very troubled by the fact that the bonus money was paid out to executives and employees in the very division that caused so many of the problems for AIG,” said Congressman Cohen. “Had corporations such as AIG not received Federal financial assistance, they would have filed for bankruptcy and would not be in the position to pay out extravagant bonuses to undeserving recipients. This bill will rectify this injustice by providing the Attorney General the authority to reclaim this taxpayer money and to prevent the fleecing of American taxpayers in the future.”

The bill applies to companies that have received more than $10 billion in federal financial assistance since September 1, 2008, and has two key components. First, it creates a federal fraudulent transfer statute that will allow the Attorney General to recover prior excessive payments to employees made by the company. This allows the government, as a creditor, to show that excessive payments were made bearing no relationship to fair value and to recover those payments for the company. Second, on an ongoing forward basis, it allows the Attorney General to limit payments to its executives to ten times the average non-management wages, just as would have been the case if the company had been forced into bankruptcy.

Congressman Cohen added, “The American people need to know that we hear their calls for action and understand their feelings of anger at this latest Wall Street scandal. The purpose of providing federal monies to corporations like AIG was to prevent a systemic collapse of the financial industry, not to pad the wallets of the very people who got us into this mess. I will fight for quick passage of this important legislation and we’re going to make sure this never happens again.”

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