H.R. 1664, the Pay for Performance Act, generally froze many types of bonus payments for executives and employees of companies that accepted funds from the Troubled Asset Relief  (“TARP”) Program until those funds were repaid. The TARP program had been created to assist troubled banks during the serious economic decline of 2008 and 2009,  The bill was one of several measures put forward in response to reports about multimillion dollar 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 TARP and news of these bonuses created protests in Congress.

This was a vote on an amendment offered by Rep. Dahlkemper (D-PA) to H.R. 1664 that expanded the scope of bonus payments for executives and employees that could not be paid by companies accepting federal funds from the TARP Program. Rep. Dahlkemper said her amendment closes loopholes that may exist in the legislation. She summarized the intent of its language as stopping all excessive bonuses “regardless of when the executive worked at the company . . . (and) regardless of what form they take.” Dahlkemper said the amendment would accomplish this by prohibiting “payments made before, during, or after employment of the executive by the financial institution receiving a direct capital investment under the TARP” clarifying that “executive compensation . . . (includes) money paid, property transferred, or services rendered.”

Rep. Bachus (R-AL) opposed the amendment because, he said, it defines the covered compensation “as payment before employment, during employment, or after termination of employment, which almost appears to be almost a ‘cradle-to-grave” period of time.

Rep. Frank (D-MA), who was managing the Pay for Performance Act and supported the amendment, responded to Rep. Bachus, by noting: “(G)olden parachutes are a form of retirement.” He added that what he characterized as “outsized retirement packages to a handful of favored employees  . . . (which have) been a part of the problem” is the kind of excessive compensation that the amendment is designed to prevent.

The amendment passed by a vote of 246-180. Two hundred and forty Democrats and six Republicans voted “aye”. One hundred and sixty-seven Republicans and thirteen Democrats voted “nay”. As a result, the House added language to H.R. 1664 setting additional limits on executive compensation that could be paid by banks receiving federal financial assistance.