A bill had been developed to limit bonuses by companies receiving federal financial assistance in response to reports about multimillion bonuses going to executives of AIG. The federal government was spending hundreds of billions of dollars to keep AIG and other banks solvent under the Troubled Asset Relief Program (“TARP”), and news of these bonuses created protests in Congress. Under usual House procedures, before a measure can be considered, the House must first approve a resolution or “rule”setting the terms for debating that measure. This was a vote on the rule setting the terms of debate for the bill designed to limit certain excessive bonuses.
Rep. Perlmutter (D-CO), who was leading the effort in support of the rule, summarized the reason for the bill itself, as follows: “(A)s the lender . . . the United States has the authority to define the terms by which we are lending money.” He noted that the salary limits in the bill apply only to financial institutions that have received a capital infusion under the TARP program and only prohibit compensation that is “unreasonable or excessive or prohibits any bonus or other supplemental payment that is not performance-based”. He also noted that the Treasury Department would establish the guidelines in the bill by which it is determined what is unreasonable or excessive.
Perlmutter said he believes “in rewarding employees for doing a good job. This bill does allow for performance compensation, but if you have received a capital investment of American tax dollars through TARP to make it through these extraordinary times, there should be commonsense limits on bonuses. . . If an institution has an outstanding debt to the Federal Government, it has to pay it back before it gets bonuses that are excessive or unrealistic.”
Under House procedures, before a bill can be considered, the House must first approve a rule for setting the terms under which the bill will be debated. Those terms typically include such conditions as which amendments may be offered during consideration of the measure. This rule allowed seven designated amendment to be offered.
Rep. Foxx (R-NC) was a leading opponent of the rule and of the bill to which the rule set the terms of consideration. She first argued that the rule should allow for unlimited amendments to be offered, and said:”(T)he majority continues its practice of limiting debate and of limiting opportunities for Republicans to offer amendments and to do whatever we can do to make a bad bill somewhat better or to make a bad rule somewhat better.” She then noted that this compensation limitation bill “sounds great. However, when you get inside the bill and you read it, it . . . allows the Treasury Department to set the salaries and compensation for all employees in a private organization. This is wrong to do.” She went on to claim “this administration . . . (is) going to run this country from the government down to every single business in the country: ‘
Rep. Arcuri (D-NY) responded by saying he understands “that some people are critical of AIG. Certainly we understand that. We all are critical of the AIG top executives. I even respect the opinions of those who are critical of this bill. . . . The thing that I don't understand is how you can be critical of both. You really can't. If you are critical of what happened at AIG, then you have to say that this is exactly the kind of thing that Congress should be doing. . . .”
The rule passed by a vote of 236-175 along almost straight party lines. All 236 “aye” votes were cast by Democrats. One hundred and seventy-one Republicans and four Democrats voted “nay”. As a result, the House was able to move to debate the bill limiting executive compensation to institutions receiving federal assistance.