By The Hill Editors - 03/23/09 04:51 PM EDT
Lawmakers who want to do the right thing in the wake of public outrage over bonuses at bailed-out firms should take a look at their own balance sheets.
AIG, Citigroup and Bank of America, three firms at the heart of the financial crisis, gave more than $2 million in political campaign contributions during the 2008 cycle. Since then, taxpayers have bailed them out to the tune of $260 billion and counting.
Neither the companies writing the checks nor the politicians cashing them did anything illegal. It’s OK for businesses to lobby Washington for policies that help them, and to form political action committees (PACs) to give added weight to their political beliefs. Also, most of the money was given before any of the firms took a dime from the government.
Still, the donations create a conflict of interest for lawmakers providing oversight of companies that in some cases are now under federal control.
Nevertheless, it would be naïve to be surprised that PACs for Citigroup and Bank of America have continued to donate money in recent months. As first reported by Newsweek, Bank of America donated $24,500 in January and February, including a $1,500 contribution to House Majority Leader Steny Hoyer (D-Md.). Citigroup gave $2,500 to House GOP Whip Eric Cantor (Va.) earlier this year.
A few lawmakers have said they will no longer accept donations from the PACs of bailed-out firms, including Speaker Nancy Pelosi (D-Calif.).
Sen. Chris Dodd (D-Conn.), the lawmaker most under attack on bonuses, has said he would give contributions to charity if he finds the donations were given by an individual from AIG who accepted and kept bonuses. He’s also said he won’t accept donations from PACs of bailed-out firms.
Still, we believe lawmakers could go one step further.
Besides refusing to accept money from bailed-out firms, lawmakers should announce they’ll either give to charity or the Treasury or Troubled Asset Relief Program (TARP) any money donated in 2008 by a firm now on the taxpayer dole.
It is inconsistent to denounce a company over its putatively unnecessary largesse to employees while accepting its political contributions. By giving back the money, a lawmaker would put his money where his mouth is.
Charities could also use the help. Between the lousy economy and budget proposals to reduce the deductions upper-income taxpayers can make from their giving, charities are expected to take a huge hit.
Lawmakers could alternatively give the money to the TARP. Companies accepting money from the $700 billion TARP are supposed to pay it back.
Political contributions would make up a tiny fraction of those funds, and would not accelerate repayment to taxpayers.
But it would be the right thing to do, and would represent a tiny sacrifice on the part of Congress.