Never since the Great Depression has the financial industry had less credibility than at this moment. Since the beginning of this recession in December 2007, more than 3.6 million Americans have been added to the unemployment roles, and the losses of U.S. financial firms has totaled more that $700 billion. Yet as families have cut their spending to the bare necessities, financial firms, who have received more than $700 billion in federal bailout money under the Troubled Assets Relief Program (TARP), have handed out more than $18 billion in bonuses.
Giving out $18 billion in bonuses at a time when ordinary Americans have seen their life savings collapse is outrageous. To give out these bonuses using federal bailout money is over the edge. However, the financial barons of our day maintain that despite the nonexistent capital in their firms, they need to continue their extravagant practices. This is readily apparent in this week's announcement that AIG, who has received multiple federal bailouts, will be doling out an additional $165 million in bonuses paid for with taxpayer money, including millions to the idiots in the unit who drove the company to ruin.
I don't buy the notion that they need lavish bonuses to keep the best and brightest. After what they have done to their companies, the economy and the savings of everyday Americans, we can't afford such brilliance. At AIG let them quit or fire them. It is hard to imagine who would do a worse job regardless of how much or little they were paid. If they insist on enforcing contracts that reward reckless incompetence, which some claim they have a legal right to collect, then I say fine, let them collect it, but Congress has the right to tax it.
For years the tax code around here has been tortured to reward people who need tax cuts absolutely the least. Hopefully we can use it this time to impose a little tax justice. I've signed on as a co-sponsor to a bill coming out of the Ways and Means Committee which will make it a federal law that all employees of companies collecting more than $5 billion in TARP funds, and earning more than $250,000 a year in gross salary will have to pay a 90% tax on any bonus money they receive.
At a minimum, AIG should be stopped -- and other firms that collect bailout money should be prohibited from issuing large cash bonuses. This is not about outrage; this is about taking action. The financial stability of our nation and our communities depends on reasonable use of taxpayer dollars. It is a matter of fundamental fairness to the American people that their hard-earned dollars are spent in a manner that will grow the entire economy, not just the bank accounts of these weasels that took our money on the guise that they would save our economic system.