Grassley Urges State AGs to Investigate Legality of Executive Pay
Sen. Charles Grassley, it seems, has given up on the Bush administration.
Just over a month after the Iowa Republican urged the Treasury Dept. to rein in executive pay for companies benefiting from the $700 billion Wall Street bailout, he is now taking his plea to the states.
In a Nov. 19 letter to the 50 state attorneys general, Grassley says that state laws might be applicable in preventing companies from using bailout funds to enrich executives. The senator points to recent efforts in New York to investigate whether American International Group (AIG) violated the state’s “fraudulent conveyance” laws when the company dished out bonuses and other perks to its executives. From the letter:
I encourage you … to consider the appropriateness of inquiring into whether financial institutions located within your State have violated (or would violate) State law by making certain executive compensation payments to executives and top management. Financial institutions that are on the verge of collapse should be tightening their belts, like most families have to do, and should not be rewarding executives with taxpayer funds, or any funds for that matter.
Of course, the better way to have ensured the funding wasn’t abused would have been to write these restrictions into the bailout law. Because, as experts have pointed out, it really did nothing to limit executive pay.