WASHINGTON - Passions have cooled a week after news of the AIG bonuses hit, but the anger remained as lawmakers and the Obama administration wrestled yesterday with the best way to address bonuses at bailed-out firms and excessive executive compensation.
In hearings and in the Capitol's corridors, few claimed to have figured out the best approach as they weighed reining in high pay without scaring off the financial firms whose cooperation the government needs to resolve the economic crisis.
A national debate over pay has begun, as the business community warned that the government's actions in the past week sent shock waves, and lawmakers who expressed outrage last week offered a more sober assessment yesterday.
Rep. Steve Israel (D-Huntington), who took a lead role in pursuing the 90 percent tax on AIG bonuses that the House passed last week, yesterday proposed a federal commission to foster a "rational discourse" on compensation at bailed-out firms.
Rep. Gary Ackerman (D-Roslyn Heights), who last week demanded names of AIG bonus recipients, yesterday offered apologies to some AIG employees for needless hurt brought about by "all of the roaring and chest beating."
For now, bonus tax legislation has been put off until next month in the Senate, Majority Leader Harry Reid (D-Nev.) said yesterday, claiming Congressional threats to tax bonuses led to many AIG employees giving back the money.
But some senators, who have fretted that the tax bill is unconstitutional and an affront to business, were awaiting a cue from President Barack Obama at last night's news conference.
Meanwhile, Treasury Secretary Timothy Geithner said at a House hearing yesterday he will draft rules and standards on executive pay, both for firms saved by taxpayers and across the financial world.
At the hearing, Rep. Peter King (R-Seaford) decried the "hysterical" and "retaliatory" bonus-tax law of last week and asked Geithner how firms could trust the government now.
Geithner said solving the economic crisis requires firms to take risk, and "that does require some confidence about the clarity about the rules of the game going forward."
Tomorrow, Geithner will return to discuss his plans for reforming financial regulation. But yesterday he said he would issue rules for compensation limits at bailed out firms enacted in the stimulus bill, and would then set strong, broad standards on executive pay.
He said that "it's appropriate for the country to put in place strong standards that govern compensation practice across the financial community as a whole, because as we've seen, those can have systemic consequences, create a more fragile and unstable system."
But Tom Quaadman, a spokesman for the U.S. Chamber of Commerce, warned that many in business view the government as an "unreliable partner" after its actions over the past 10 days.