Congress and Wall Street – The Bonus -Driven World of Politics and Finance

Posted on June 26, 2011


March, 2009:

Senate Majority Leader Harry Reid and fellow Democrats on Tuesday warned American International Group Inc that its employees should return bonuses or face a massive tax bill that would return most of the money to the federal government.

“We expect that you will report back to Congress on your efforts to recoup these payments in short order,” Reid and nine other Senate Democrats wrote in a letter to AIG CEO Edward Liddy, who is to testify before Congress on Wednesday.

In a speech on the Senate floor, Democrat Charles Schumer, a signee of the letter, noted AIG lost nearly $100 billion last year and is now being propped up by U.S. taxpayer funds. He said providing performance bonuses to employees of the insurance giant “defines ‘Alice in Wonderland’ business practices … it boggles the mind.”

Schumer called on the AIG employees to return the bonuses. [Reuters]

“If they don’t we plan to tax virtually all of it,” he said.

May, 2011

The Senate will soon post salary information on the internet as the House already does.  One has to do a lot of digging to arrive at the actual bonuses. But if the House is any indication, no matter the budget crisis, bonuses are still paid.

By Richard Simon, Los Angeles TimesMay 24, 2011, 5:15 p.m.
Reporting from Washington—

Even as deep federal budget cuts loomed at the end of last year, members of Congress from both parties paid taxpayer-funded bonuses to their staffs.

Overall, House members spent about $21.5 million more on their office payrolls for the fourth quarter of 2010, when bonuses are traditionally paid, than they spent for the average of the three previous quarters, according to LegiStorm, a Washington group that tracks congressional pay

Defeated and retiring lawmakers paid an average bonus of about $4,000. Returning lawmakers paid an average $2,300, the group found.

The money came out of the average $1.5 million allocated to each office for expenses including salaries, travel and bottled water purchases — money that, if unspent at the end of the year, goes back to the Treasury. Some lawmakers have boasted of sending leftover funds from their office budgets to the Treasury to show their frugal ways.

Former Rep. Ginny Brown-Waite (R-Fla.) was at the top of the bonus-spending list, paying out more than $200,000. Overall, 20 members of California’s 53-member House delegation said they paid bonuses last year, including five who spent $100,000 or more.

“These are young people who are working very hard at very moderate pay,” said Rep. Doris Matsui (D-Sacramento), who paid her staff an average bonus of just under $9,000.

Lawmakers are not required to report congressional staff bonuses. The data compiled by LegiStorm, a nonpartisan watchdog that posts congressional pay and other congressional data online, examined the average payroll for offices for the fourth quarter compared with the average for the three prior quarters.

Democrats’ average fourth quarter salary rose 21.2%, while Republicans‘ rose 16.7%, the group said. The Democratic average was higher because of their heavy losses in last year’s election.

Jock Friedly, LegiStorm founder and president, said it could often be easier for defeated or retiring lawmakers to award bonuses because they no longer faced voter scrutiny.

And to get out the voter sympathy for staffers, here is the stock argument:

Jock Friedly, LegiStorm founder and president, said it could often be easier for defeated or retiring lawmakers to award bonuses because they no longer faced voter scrutiny.

“When you talk to members who retire, they often say that they feel bad for their staffers because they’re being thrown out of jobs through no fault of their own and they don’t get any kind of severance pay,” he said. After Republicans lost control of the House in 2006, their fourth-quarter salaries rose more than those of the Democrats.  [LA Times]

About these ads
Posted in: Uncategorized