Stimulus Limits Bonuses For Bailout Execs
The Senate passed a $787 billion economic stimulus plan Friday night, and President Obama says he will sign it Tuesday in Denver.
Some of the highlights include worker tax credits of up to $400, $70 billion to cushion the impact of the alternative minimum tax and $36 billion for state unemployment benefits. It also includes surprisingly tough rules on executive bonuses at banks that receive bailout money, reports CBS News correspondent Michelle Miller.
Over the objections of the Obama Administration, Senate Banking Chairman Chris Dodd slipped in a little noticed provision that puts strict limits on those massive year end bonuses for top executives at troubled banks.
In a statement, issued late last night, Dodd explained: "These tough new rules will help ensure that taxpayer dollars no longer effectively subsidize Wall Street bonuses."
"If they have their hands in the public pockets, these guys can't have it both ways," says economist Dan Mitchell. "If they're going to mooch they're not going to get big salaries."
The rules apply to the companies which have already received or will get future payments of at least $250 million in bailout money. For example, Miller reports, a top-level manager making a million dollars a year could only receive bonus of $500,000. And if he or she gets stock options, they can't cash them in until the company pays the government back.
It's a reaction to public outrage after reports that 600 employees at Merrill Lynch received at least $1 million bonuses. That's just before the firm was taken over by Bank of America last December. Some Wall Street watchers believe most companies will find a loophole.
"These companies and executives aren't stupid," Mitchell says. "Whether it's going to be stock options or fringe benefits, they'll find ways to get their money."
The stimulus bill passed with the bare minimum sixty votes, only because three Republican senators broke ranks to support it.
By Michelle Miller
