Senators Webb, Boxer Introduce Bill to Recoup Wall Street Bonuses Paid with Taxpayer Dollars

From the Office of Senator Webb

February 4, 2010

Contact: Jessica Smith - 202-731-5096
Zachary Coile, Boxer (202) 224-8120

Washington, DC- U.S. Senators Jim Webb (D-VA) and Barbara Boxer (D-CA) today introduced the Taxpayer Fairness Act, legislation that would impose a 50 percent tax on excessive bonuses paid by Wall Street banks and other firms that benefited from billions of taxpayer dollars in 2009.

"This is not class warfare," said Senator Webb. "This is not something that's going to run the gamut of all executive compensation and bonuses. This is a one shot deal. This is a tax on excessive bonuses of TARP recipients that received more than 5 billion dollars from the American taxpayer in 2009."

"The Financial Times, a paper dedicated to the free market, editorialized in favor of this position at the end of last year," continued Webb. "We believe this is a fair and reasonable approach. It offers equity and a level of fairness to the American taxpayers who bailed these companies out."

"In September 2008, Secretary Paulson and Chairman Bernanke told the Congress that, without a $700 billion investment into the TARP program to assist our major financial institutions, our world was going to go into cataclysmic economic freefall," added Webb. "Many of us supported that program with the understanding that, if the American taxpayers were putting $700 billion into the system in order to rescue these financial institutions, the American taxpayers would be able to get a return on their investment as well."

Senator Boxer said, "To avert a financial collapse, taxpayers saved 'too big to fail' companies. It is outrageous that these companies are doling out millions of dollars in bonuses while the rest of America feels the pain of their reckless decisions. The Taxpayer Fairness Act levies a 50 percent taxpayer fairness fee on bonuses in excess of $400,000 paid by firms that took $5 billion or more in TARP funds."

The legislation would apply only to Wall Street institutions that received more than $5 billion from the Troubled Asset Relief Program (TARP).

The bill would impose a 50 percent excise tax on the bonuses of employees at these firms that exceeded $400,000 in 2009. Any employee who received a bonus larger than $400,000 - the salary of the President of the United States - would have to pay a 50 percent tax on the portion of the bonus over $400,000.

This is a one-time tax, affecting only bonuses received this year that are based on performance in 2009-a year when the very survival of these institutions depended on government support. The revenues generated would be used for deficit reduction.

In 2008 and 2009, the financial sector received unprecedented aid from taxpayers. In addition to the $700 billion TARP, there were 50 separate Federal programs offering $23 trillion in loans, grants, or asset guarantees to the financial sector, according to the nonpartisan Special Inspector General for the TARP (SIGTARP.)

News reports this week indicate that Wall Street firms that benefited from taxpayer support plan to pay significant bonuses this year- including $4.4 billion in bonuses at Bank of America's investment banking unit and $100 million in bonuses at AIG.

To read the full text of the Boxer-Webb "Taxpayer Fairness Act," visit: http://www.scribd.com/doc/26377327/Taxpayer-Fairness-Act

To view relevant charts, visit: http://www.scribd.com/full/26379670?access_key=key-q4rq52731ad5l43g9b5

To read the Financial Times editorial referenced by Senator Webb, visit: http://webb.senate.gov/newsroom/newsarticles/11-19-2009-02.cfm ///