Why Pelosi fails to Lead! AIG Bonus Bill's unintended Consequences

Lawmakers bellowed with outrage last week following revelations that AIG was paying millions in bonuses to employees at a rogue division based in suburban Connecticut.

But the restrictions House members prescribed in response -- a 90 percent tax on those bonuses -- could have painful side effects for the subsidiaries of other bailed-out financial companies, including one located just a few miles away from the troubled AIG unit.

Phibro, a commodities trading company located in Westport, Conn., potentially could be hit with the 90 percent tax on bonuses since its parent company, Citigroup, has received $45 billion in bailout money.

Phibro, though, has not actually taken federal rescue funds and is considered a relatively stable and profitable subsidiary of Citigroup.

The subsidiary side effect is just one example of the complications the House-passed bill could create if such a measure clears the Senate and heads to President Obama's desk.

U.S. Rep. Jim Himes, D-Conn., who represents the district where Phibro is based, said the bill is "undoubtedly replete with unintended consequences" -- the product of what he called "hasty work."

Himes, who voted for the bill, said hefty taxes on subsidiaries of bailed-out firms are one such consequence.

"Phibro is to my understanding a profitable entity that employs a lot of people," Himes said. "We need to be careful, as this legislation winds its way through Congress and to the White House, that we don't dis-incentivize or harm groups that are profitable and doing well."

Himes said Andrew Hall, head of Phibro, "did express some concerns" to him about the bonus tax bill during a recent conversation.

But the Connecticut Democrat said he expects the Senate to work up an entirely different bill to address excessive bonuses. He said the House version was a "signal" to taxpayers that Congress is paying attention to the issue, but not a final product. - FOX News Story

I just about fell out of my chair when he says the "House versions was a 'signal' to taxpayers that Congress is paying attention to the issue". Are you kidding me, they made a knee jerk reaction and had no idea what they were doing. Pelosi is an idiot that jumped up and down saying that this bill will show we are serious.