Senators have voice in financial debate

Posted March 24, 2009, at 7:35 p.m.

AUGUSTA, Maine — Maine’s two centrist senators are staying in the national spotlight as they push for measures to rein in bonuses for corporate executives and strengthen oversight of the financial markets.

While fury over the massive bonuses paid to American Insurance Group executives has waned on Capitol Hill in recent days, Sen. Olympia Snowe is continuing to advocate for a tax on those payments at companies that received federal bailout money.

Sen. Susan Collins has introduced legislation aimed at bolstering the nation’s financial regulatory system and adopting other changes to ensure that institutions don’t become “too big to fail.”

Both of Maine’s Republican senators, who were key to passage of President Obama’s economic stimulus package earlier this year, also have been outspoken in their criticism of the president’s proposed budget.

“These are unconventional times and therefore the status quo simply cannot prevail,” Snowe said Monday. “We have to really make a progressive effort to curtail this budget deficit.”

On the issue of the AIG bonuses, Snowe is co-sponsor of a bipartisan bill to impose a 35 percent tax both on bonuses paid by employers and those received by employees of financial firms receiving more than $100 million in bailout money.

The House of Representatives last week approved a bill that would tax 90 percent of the AIG bonuses and those of other institutions that were bailed out, but the House bill would apply to fewer total firms. Senate leaders have indicated that they plan to slow down consideration of the Senate bill.

Snowe spokesman John Gentzel said the senator believes it would be wrong to back away from the issue now. Snowe also said Tuesday that Obama needs to clarify his position on going after the bonuses after his administration has sent mixed messages.

Gentzel also pointed out that Snowe and Sen. Ron Wyden, D-Ore., had successfully attached an amendment to the stimulus bill to impose a 35 percent tax on excessive bonuses from firms that received bailout money. But that amendment was stripped out during the House and Senate negotiations on the stimulus package.

“Her provision would have taken care of this had it remained in the stimulus bill,” Gentzel said.

Collins, meanwhile, has introduced legislation that she said would strengthen oversight and accountability of financial markets by creating an independent Financial Stability Council to monitor risky practices that threaten the wider system.

The council also would have the authority to propose changes to regulatory policy and to close regulatory “black holes” that contributed to the current crisis.

“I believe that we are never going to fully restore confidence in our financial markets until we reform the regulations,” Collins said Monday. “The fact is the same problems that occurred to trigger this cascade of negative consequences could still occur today because there are still these gaps in the regulations.”

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