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End Government Reimbursement of Excessive Executive Disbursements (END THE GREED) ACT

August 4, 2009
Floor Statement
Rep. Maxine Waters [D-CA]: Mr. Speaker, I rise in strong support of the End GREED Act, H.R. 1575. We worked on this bill in the Judiciary Committee, and with bipartisan support, I believe that we made significant improvements over the original bill.

This narrowly crafted measure gives the Attorney General the ability to recover the most egregious bonuses by entities that receive or have received more than $5 billion in direct capital investment by the U.S. under TARP or HERA by filing a civil action in federal court. Every state in the U.S. has some form of similar fraudulent transfer statute, including my home state of California.

The Attorney General could only do so where the entity was insolvent and paid excessive compensation to an officer, director, or employee who provided less than reasonably equivalent value in exchange. This applies to bonuses paid after September 1, 2008.

This legislation takes another critical step in executive compensation by reaching bonuses made at the end of 2008. For example, more than $3 billion in bonuses were paid by Merrill Lynch late last year.

This bill also provides a mechanism for recovering bonuses paid to non-citizens who would be unaffected by the tax provision Congress recently passed. New York Attorney General Cuomo reported that only 47 percent of AIG bonuses were paid to U.S. citizens. Therefore, this bill authorizes the Attorney General, after consultation with the Treasury Secretary, to subpoena witnesses and to obtain necessary information relevant to the bonuses.

Finally, Mr. Speaker, I know some of the critics of this legislation have raised questions about the constitutionality of this bill. Please let me add to the Record the comments of several prominent constitutional scholars who have confirmed that the bill is constitutional. Here's what some of the constitutional scholars have said about this bill:

Prof. Laurence Tribe (Harvard)--"Having carefully reviewed the text of the bill, I believe it stands on solid constitutional ground."

Prof. Doug Baird (Univ. of Chicago)--"Because H.R. 1575 largely replicates rights that
the United States already possesses under state laws, there seems to be little doubt that Congress has the power to enact it."

Prof. Michael Gearhardt (UNC)--"I believe that The End GREED Act is unquestionably constitutional. Each of the powers deployed to enact this bill is plenary, and these powers--individually and collectively provide an unusually strong, unassailable constitutional foundation for The End GREED Act."

Prof. Ken Klee (UCLA)--"It is my view as a professor of law that the fraudulent transfer provisions of the Manager's amendment to H.R. 1575 are constitutional on their face and as applied to avoid payments of excessive compensation made under contracts entered into before the date of enactment."

Mr. Speaker, I urge my colleagues to support H.R. 1575, the End GREED Act.

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