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TARP Bonuses

Source: Investopedia
This Article has been Edited for Accessibility

TARP Bonuses

What is 'TARP Bonuses'

A buzzword coined by the financial media during the financial crisis of 2008/09 to describe bonuses paid to employees and executives of banks and other financial firms that received Troubled Asset Relief Program (TARP) funds. TARP bonuses were controversial because employees were receiving additional pay even as their companies required bailout funds.

Explaining 'TARP Bonuses'

Companies argue that they have to pay bonuses to retain talent. But critics contend that because the companies led by the executives in question were being rescued with taxpayer money, the bonuses were not well-deserved and the recipients should not be considered "talent".

On March 19, 2009, the House approved a bill to create legislation that would put a 90% tax on bonuses earned during the 2008 year. This tax would apply to banks receiving TARP bailout funds of more than $5 billion. This legislation was created in response to the public anger surrounding $165 million in bonuses that was paid to traders in the AIG Financial Products (A.I.G.F.P.) division, the division responsible for the majority of losses surrounding the fall of A.I.G.


Additional Resources

  1. Bailouts, Bonuses, And The Return Of Unjust Gains [corpgov.law.harvard.edu]
  2. The Global Financial Crisis Of 2008 [mitsloan.mit.edu]
  3. Download The Pdf (4 Pgs) [law.cornell.edu]
  4. Department Of Economics [umass.edu]
  5. Do Bankers Deserve Bonuses? [pages.stern.nyu.edu]
  6. Why Are Banks Rushing To Repay Tarp? [bu.edu]
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