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Financial Services Committee to Consider Legislation to Prohibit Bonus Payments

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Washington, DC, March 20, 2009 | comments

House Financial Services Committee Chairman Barney Frank (D-MA) announced today the committee will consider legislation to prohibit any bonus payments by companies who have received capital investments under the TARP program and the Housing and Economic Recovery Act until these investments are repaid in full.  The bill also prohibits any compensation arrangements that are excessive and all non-performance based bonuses for these companies.  

The bill adds new compensation/bonus restrictions to the Emergency Economic Stabilization Act for financial institutions that receive or have received a capital investment by the Treasury Department under the Troubled Asset Relief Program or the Housing and Economic Recovery Act (which covers Fannie Mae, Freddie Mac and the Federal Home Loan Banks).  While such a capital investment is outstanding, recipients will be prohibited from:

  • Paying any bonus to any employee, regardless of when any agreement to pay a bonus was entered into;
  • Paying any compensation that is “unreasonable or excessive,” as defined in standards set by the Treasury Secretary
  • Paying or arranging to pay any retention payment, bonus, or other supplemental payment that is not directly based on performance-based standards set by the Treasury Secretary.

The legislation will be “marked-up” in the Financial Services Committee on Tuesday, March 24th, and the full House of Representatives will be able to consider the legislation the following week.

Click Here To View Legislation

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