S 431 ISCommentsClose CommentsPermalink

To establish the Temporary Economic Recovery Adjustment Panel to curb excessive executive compensation at firms receiving emergency economic assistance.CommentsClose CommentsPermalink

February 12, 2009CommentsClose CommentsPermalink

Mr. WHITEHOUSE introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban AffairsCommentsClose CommentsPermalink

To establish the Temporary Economic Recovery Adjustment Panel to curb excessive executive compensation at firms receiving emergency economic assistance.CommentsClose CommentsPermalink

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,CommentsClose CommentsPermalink

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Economic Recovery Adjustment Act of 2009’.CommentsClose CommentsPermalink

SEC. 2. FINDINGS.

Congress finds that--CommentsClose CommentsPermalink





(1) the deterioration of financial firms in 2008 and the resulting crisis of confidence in the financial markets have required broad intervention by the Federal Government in the financial sector;CommentsClose CommentsPermalink





(2) the Emergency Economic Stabilization Act of 2008, signed by President Bush on October 3, 2008, included a $700,000,000,000 Troubled Asset Relief Program (or ‘TARP’) for the express purpose of ‘providing stability to and preventing disruption in the economy and financial system’;CommentsClose CommentsPermalink





(3) the investment and commercial banks and other financial institutions that have received taxpayer-funded bailouts perform public functions supporting the operation of the economy, in addition to their private profit-making functions;CommentsClose CommentsPermalink





(4) reports of billions of dollars in compensation and obligations to executives have eroded public confidence in the TARP, and have caused increasing opposition to other bailout proposals, thereby impeding the Government’s ability to address the financial crisis;CommentsClose CommentsPermalink





(5) participation in the TARP and any other Federal Government bailout program should be conditioned on a fair restructuring of executive compensation obligations;CommentsClose CommentsPermalink





(6) taxpayer dollars should not support unreasonable compensation to executives, particularly when in the absence of taxpayer support, such compensation would be reduced as part of a bankruptcy restructuring or liquidation; andCommentsClose CommentsPermalink





(7) establishing a due process forum will allow the Government to ensure that executive compensation relying on taxpayer funds is fair and reasonable, and that all sides enjoy an opportunity to be heard.CommentsClose CommentsPermalink

SEC. 3. DEFINITIONS.

In this Act, the following definitions shall apply:CommentsClose CommentsPermalink





(1) ASSISTED ENTITY- The term ‘assisted entity’ means any recipient or applicant for assistance under the TARP.CommentsClose CommentsPermalink





(2) PANEL- The term ‘Panel’ means the Temporary Economic Recovery Oversight Panel established under section 7.CommentsClose CommentsPermalink





(3) EXECUTIVE COMPENSATION- The term ‘executive compensation’ means wages, salary, deferred compensation, benefits, retirement arrangements, options, bonuses, office fixtures, goods, or other property, travel, or entertainment, vacation expenses, and any other form of compensation, obligation, or expense that is not routinely provided to all other employees of the assisted entity.CommentsClose CommentsPermalink





(4) OFFICE- The term ‘Office’ means the Office of the Taxpayer Advocate, established under section 4.CommentsClose CommentsPermalink





(5) TARP- The terms ‘TARP’ and ‘TARP funds’ mean the Troubled Asset Relief Program established under section 101 of the Emergency Economic Stabilization Act of 2008 and funds received thereunder, respectively, or pursuant to any successor program.CommentsClose CommentsPermalink





(6) SECRETARY- The term ‘Secretary’ means Secretary of the Treasury.CommentsClose CommentsPermalink

SEC. 4. TAXPAYER ADVOCATE.

(a) Establishment- There is established within the Department of Justice, the Office of the Taxpayer Advocate.CommentsClose CommentsPermalink





(b) Advocate- The Office shall be headed by an Advocate, to be appointed by the Attorney General of the United States for such purpose.CommentsClose CommentsPermalink





(c) Duties- The Advocate is authorized to conduct ongoing audits and oversight of the recipients of TARP funds with respect to compensation of the officers and directors of such entities.CommentsClose CommentsPermalink





(d) Access to Records-CommentsClose CommentsPermalink





(1) IN GENERAL- To the extent otherwise consistent with law, the Advocate and the Office shall have access, upon request, to any information, data, schedules, books, accounts, financial records, reports, files, electronic communications, or other papers, things, or property belonging to or in use by the assisted entity and to the officers, directors, employees, independent public accountants, financial advisors, and other agents and representatives thereof (as related to the agent or representative’s activities on behalf of or under the authority of the assisted entity) at such reasonable time as Office may request.CommentsClose CommentsPermalink





(2) COPIES- The Advocate may make and retain copies of such books, accounts, and other records as the Advocate deems appropriate for the purposes of this Act.CommentsClose CommentsPermalink





(e) Reporting- The Advocate shall submit quarterly reports of findings under this Act to the appropriate committees of Congress, the Secretary and the Special Inspector General for the TARP established under the Emergency Economic Stabilization Act of 2008 on the activities and performance of the Office.CommentsClose CommentsPermalink





(f) Audits- The Office is authorized to conduct an audit of any assisted entity for purposes of this Act.CommentsClose CommentsPermalink

SEC. 5. POWERS OF THE OFFICE.

(a) Investigations and Evidence- The Office may, for purposes of carrying out this Act--CommentsClose CommentsPermalink





(1) take depositions or other testimony, receive evidence, and administer oaths; andCommentsClose CommentsPermalink





(2) require, by subpoena or otherwise, the attendance and testimony of witnesses and the production of books, records, correspondence, memoranda, papers, and documents.CommentsClose CommentsPermalink





(b) Subpoenas-CommentsClose CommentsPermalink





(1) SERVICE- Subpoenas issued under subsection (a)(2) may be served by any person designated by the Office.CommentsClose CommentsPermalink





(2) ENFORCEMENT-CommentsClose CommentsPermalink





(A) IN GENERAL- In the case of contumacy or failure to obey a subpoena issued under subsection (a)(2), the United States district court for the judicial district in which the subpoenaed person resides, is served, or may be found, or where the subpoena is returnable, may issue an order requiring such person to appear at any designated place to testify or to produce documentary or other evidence. Any failure to obey the order of the court may be punished by the court as a contempt of that court.CommentsClose CommentsPermalink





(B) ADDITIONAL ENFORCEMENT- Sections 102 through 104 of the Revised Statutes of the United States (2 U.S.C. 192 through 194) shall apply in the case of any failure of any witness to comply with any subpoena or to testify when summoned under the authority of this section.CommentsClose CommentsPermalink





(c) Information From Federal Agencies- The Office may secure directly from any department, agency, or instrumentality of the United States any information related to any inquiry of the Office conducted under this Act. Each such department, agency, or instrumentality shall, to the extent authorized by law, furnish such information directly to the Office, upon request.CommentsClose CommentsPermalink

SEC. 6. EXECUTIVE COMPENSATION AUTHORITY.

(a) Negotiated Reductions Authorized- The Advocate is authorized to assist the Secretary in the negotiation of assistance under the TARP, in order to assure that fair and reasonable executive compensation is paid by entities receiving TARP funds, and to defend any such agreements in the event of any challenge to the adjustments to compensation obligations. If, after an audit authorized by this Act, the Advocate finds reason to believe that any assisted entity would have become insolvent if not for the receipt of assistance under the TARP, the Advocate shall negotiate a reduction in the executive compensation obligations of the assisted entity as a condition of the continuing use or future receipt of such TARP assistance.CommentsClose CommentsPermalink





(b) Form- Negotiated reductions in compensation under subsection (a)--CommentsClose CommentsPermalink





(1) may include vested deferred compensation; andCommentsClose CommentsPermalink





(2) shall be in an amount that is fair and reasonable in light of the taxpayers’ assistance, but not less than the estimated value of the compensation obligations that would face the estate or debtor-in-possession if the TARP funds had not been granted and the entity had filed for bankruptcy protection.CommentsClose CommentsPermalink





(c) Certification to Adjustment Panel- The Advocate shall certify the findings of the Office under this section to the Panel.CommentsClose CommentsPermalink

SEC. 7. TEMPORARY ECONOMIC RECOVERY OVERSIGHT PANEL.

(a) Establishment- There is established the Temporary Economic Recovery Oversight Panel.CommentsClose CommentsPermalink





(b) Makeup of Panel- The Panel shall be comprised of 5 members, appointed by the President for such purpose from among United States bankruptcy court judges. The Secretary shall provide for appropriate space and staff to support the functioning of the Panel.CommentsClose CommentsPermalink





(c) Duties- The Panel shall--CommentsClose CommentsPermalink





(1) promptly evaluate each proposed settlement reached under section 6;CommentsClose CommentsPermalink





(2) approve or deny such proposed settlement; andCommentsClose CommentsPermalink





(3) if no settlement is reached under section 6, upon petition of the Advocate or any individual subject to the actions of the Advocate under section 6, issue an order establishing an executive compensation program for such individuals in accordance with this section.CommentsClose CommentsPermalink





(d) Notice and Hearing Required- The Advocate shall provide adequate notice to all affected persons of its intention to seek an order from the Panel in accordance with this section, and the Panel shall hold an evidentiary hearing on any proposed settlement or petition of the Advocate.CommentsClose CommentsPermalink





(e) Standing- Under any proceeding before the Panel, any individual whose compensation might be adversely affected by Panel action shall be a party in interest, having full procedural rights, including the right to challenge a settlement between the assisted entity and the Advocate, to challenge the certified findings of the Advocate, or to appeal any order of the Panel.CommentsClose CommentsPermalink





(f) Appeals- The Advocate and any party having standing before the Panel shall have the right to appeal an order under this Act directly to the United States Court of Appeals for the District of Columbia Circuit.CommentsClose CommentsPermalink





(g) Effective Period- Any order of the Panel setting forth a reduction in compensation shall be effective 6 months after confirmation, and shall remain in effect while any obligation arising from assistance provided under the TARP remains outstanding.CommentsClose CommentsPermalink