Bank CEOs Push Back on Legislation That Would Tax Bonuses

The chief executives of the nation's three largest banks on Friday pushed back against legislation that would heavily tax Wall Street bonuses, the Wall Street Journal reported.

Citigroup Inc. CEO Vikram Pandit and Bank of America Corp.'s Kenneth Lewis both issued memos to employees criticizing a tax that would make it hard to retain workers. And J.P. Morgan Chase Co. CEO Jamie Dimon reassured his 200 top executives in a conference call that the bank is actively engaging Washington on the matter.

The executives are responding to Washington's latest salvo against Wall Street bonuses. Outrage about massive payouts came to a head this week when it was learned that embattled insurer American International Group Inc., which has received federal government funding to keep it operating, would pay $165 million in bonuses to employees of a unit that caused massive losses at the company.

The House passed legislation on Thursday to impose a 90 percent surtax on bonuses granted to employees with household income of more than $250,000 at companies that received at least $5 billion from the government's financial rescue program.

The Senate is considering a similar plan that could be up for a vote as soon as next week. Eight banks -- Citi, JPMorgan, BofA, Goldman Sachs Group Inc., Morgan Stanley, PNC Financial Services Group Inc. and U.S. Bancorp -- have each received more than $5 billion from the government's Troubled Asset Relief Plan, known as TARP.

Pandit said the proposals would affect "countless" people who would find it difficult to repay their bonuses. He noted that not all workers in the financial services field are to blame for the current economic morass, adding that the banking giant removed the people who are responsible for the company's distress and acted quickly to streamline its business.

"The work we have all done to try to stabilize the financial system and to get this economy moving again would be significantly set back if we lose our talented people because Congress imposes a special tax on financial services employees," Pandit wrote in a memo distributed to Citi's 300,000 employees.

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