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Yarmuth Calls for Crack Down on Wall Street Bonuses, Works to Create New Loans for American Small Businesses

 

(Washington, DC) Today, Congressman John Yarmuth (KY-3) joined twenty-three House colleagues in calling for immediate action to rein in Wall Street banks from giving excessive bonuses to executives just months after receiving taxpayer funds to stay afloat.  Congressman Yarmuth announced he was the newest cosponsor of H.R. 4426 – the Wall Street Bonus Tax Act – which would levy a 50 percent penalty on excessive bonuses at companies that received funds from the Troubled Asset Relief Program of 2008. The revenue generated by this penalty would be directed to low-interest direct loans for small businesses.

 

“The Wall Street banks that used taxpayer dollars to stay afloat apparently have forgotten that they owe their newfound profitability to the American taxpayer. They’ve frozen lending to small businesses, yet are doling out billions in bonuses to the same executives who got us into this mess,” said Congressman Yarmuth. “Enough is enough – this legislation ensures that we do not go back to the days of reckless Wall Street behavior.”

 

Five of the largest banks receiving TARP funds last year have allocated upwards of $90 billion for executive compensation, with Goldman Sachs expected to pay an average bonus of $595,000 and JPMorgan expected to pay an average of $463,000. At the same time, the 22 banks receiving the most federal assistance in recent months have reduced lending to small businesses by $11.6 bllion just since April of 2009.

 

The Wall Street Bonus Tax Act – initially introduced by Congressman Peter Welch (VT – at large) - would levy a 50 percent tax on bonuses in excess of $50,000 paid to executives at banks that received Troubled Asset Relief Program funds. The revenue generated by that penalty would go into a fund for new low-interest, guaranteed direct loans to small businesses currently struggling to obtain credit. That loan program would be modeled after the Small Business Administration’s 7(a) loan program.

 

Congressman Yarmuth’s support of the Wall Street Bonus Tax Act comes on the heels of his sponsorship of the Give Credit to Main Street Act , which would redirect TARP funds into a similar direct loan program for small businesses.