Sen. Chuck Grassley, ranking member of the Committee on Finance, with jurisdiction over taxes, has worked to hold tax-exempt hospitals accountable for the federal tax benefits they receive.  The health care legislation signed into law yesterday includes provisions Grassley co-authored to impose standards for the tax exemption of charitable hospitals for the first time.  The bill requires that a hospital complete a community needs assessment once every three years and adopt and publicize a financial assistance policy; prohibits billing those who qualify for financial assistance the top rates; and prohibits a hospital from taking extraordinary collection actions if the hospital has not made reasonable efforts to notify patients of its financial assistance policy.   The bill also requires the IRS to review the tax-exempt status of each hospital every three years; requires Treasury and Health and Human Services to submit an annual report to Congress on the level of charity care, bad debt expenses and the unreimbursed costs of means-tested and non-means-tested government programs; and requires Treasury and HHS to provide a report in five years on the trends on the items reported on an annual basis.  Grassley made the following comment on the advancement of these provisions.

"Tax-exempt hospitals don't have many measures of accountability for their special status. The law hasn't given them much direction, and so they've defined standards for themselves.  Sometimes that's resulted in providing very little charitable patient care or other community benefits, failing to publicize charitable care to patients, charging indigent, uninsured patients more than insured patients, and using very aggressive collection practices.  The Government Accountability Office and others, including the former IRS commissioner, have said for a long time that there is often no discernible difference between the operations of taxable and tax-exempt hospitals. These new provisions are modeled after principles and polices that the Catholic Health Association has had in place for years.  I appreciate the association's willingness to have honest, forthright conversations about charitable hospitals' activities. The provisions take steps to differentiate tax-exempt hospitals from for-profit hospitals and provide further transparency about tax-exempt hospitals' fulfilling their charitable mission.  Congress, the IRS, and the public will now have additional tools and information to ensure that charitable hospitals act charitably." 

The provisions enacted in the new health care law are the result of Grassley's leadership on tax-exempt organizations' accountability and transparency, including hospitals.   In 2005, he sent letters of inquiry to some of the nation's largest tax-exempt hospitals.  In 2006, he convened a hearing and released a summary of the hospitals' responses.  In 2007, he released a staff discussion draft of potential legislative reforms and convened a roundtable of experts to discuss the potential reforms.  In 2008, he followed up with letters of inquiry to more hospitals and received a report he'd requested from the Government Accountability Office.  In 2009, he drafted legislative reforms and succeeded in persuading the Democratic majority to include several of the reforms in the new health care law.

WASHINGTON - Senator Chuck Grassley today asked the Special Inspector General for TARP to investigate why the Treasury Department did not follow through on the mandate from Congress in last year's stimulus bill to require that all TARP recipients, including AIG, meet appropriate standards for executive compensation.

"Since the Treasury Department failed to do this, we now see the multi-million severance payments going to departing TARP executives, such as the $3.9 million paid in severance to AIG's former general counsel, who left the job voluntarily," Grassley said.

Grassley also asked the TARP watchdog to determine if Treasury Department officials with potential conflicts of interest were permitted to draft the Treasury regulations that govern executive compensation, including severance at bailed out companies such as Bank of America, AIG and others.

Grassley described his request of the Special Inspector General in a statement placed in today's Congressional Record. The floor statement text is below. Click here to read Grassley's letter of request to the Special Inspector General.

Last week, Grassley questioned the Treasury Secretary about the failure of the Department to act on the congressional mandate to impose appropriate standards on executive compensation. "It seems as if the Treasury Department unnecessarily tied the hands of the Special Master for Compensation before he even assumed his duties," Grassley said. Click here to read that news release and letter.

Floor Statement of Senator Chuck Grassley

AIG Severance Payments

March 23, 2010

Mr. President. I recently asked Secretary Geithner why the Treasury Department is allowing AIG to pay millions of dollars of severance pay to executives given the billions of dollars of taxpayer assistance AIG has received.

At one point I even said that AIG has the American taxpayer over a barrel and that AIG has outmaneuvered the Administration.

Mr. Kenneth Feinberg, the Treasury Special Master for executive compensation, insisted he was not outmaneuvered by AIG.

As it turns out, he was not outmaneuvered by AIG.

Instead, he was outmaneuvered by Secretary Geithner. Let me explain what I mean.

In February, 2009, we enacted the Recovery Act. The law required Secretary Geithner to take control of the runaway executive compensation at companies that the American taxpayer bailed-out.

Congress provided Mr. Geithner with several tools to accomplish this critical job.

By far the most important and most flexible tool Congress gave Mr. Geithner was a general mandate to require bailed-out companies like AIG to meet "appropriate standards" for executive compensation.

This rule was applicable to compensation already in place, compensation in the future, and compensation for all executives, not just a handful of the most senior executives.

What happened to this tool?

Well, even before the law was passed the bonuses, retention awards, and incentive compensation were "grandfathered."

That means that while one part of the statute banned them for a handful of senior executives, another part said they had to be paid if the payments were based on a contract that existed in February, 2009.

We all remember the outrage when people learned that this provision was quietly added by the Senate drafters on the other side of the aisle because it required AIG to pay massive bonuses in March 2009 and again earlier this year.

Secretary Geithner was quoted in the press at the time saying that "Treasury staff" worked with the Senate drafters on the grandfather carve-out.  Well, the damage was done.

The grandfather loophole was law. You might say the American taxpayer was outmaneuvered by Treasury staff too.

The President instructed Secretary Geithner to "pursue every single legal avenue to block these bonuses and make the American taxpayers whole."

The next step required Treasury to implement the law and use the tools Congress gave Mr. Geithner to put the brakes on runaway executive compensation at firms where taxpayers are footing the bill.

What did Treasury do?

One thing Treasury apparently did was hire a Wall Street executive compensation lawyer from a firm that specializes in helping highly paid executives maximize their pay, but more about that later.

Despite the public outcry over the loophole, which permitted AIG employees and others to walk away with millions, Treasury wrote a regulation that actually expands the loophole even further.

That's right, in the face of overwhelming public outrage, Treasury quietly worked to expand the loophole. Let me explain how they did that.

The grandfather provision in the law that Congress enacted protected three things: bonuses, retention awards, and incentive compensation. It did not protect severance. Let me repeat: it did not protect severance.

But in what appears to be an effort to protect severance agreements despite the statutory language, the regulations Treasury drafted expanded the term "bonus" beyond its normal meaning.

Unlike bonuses, severance payments are intended to ease someone out the door, not reward them for doing a great job.  Severance is basically the opposite of a retention bonus.

But, after Treasury drafted the regulation, suddenly, severance payments were also protected by the grandfather loophole, just like bonuses.  Treasury must have known exactly what it was doing.

AIG had an executive severance plan that dated back to March 2008. It was just the sort of contract the grandfather provision would protect if Treasury expanded the loophole.

And what was the impact of the Treasury regulation on the bottom line? What did American taxpayers have to pay?

Because of this regulation, AIG recently paid two of its executives $1 million and $3.9 million in severance pay. We don't yet know how many others have received severance or may receive it in the future.

As the law was passed, these payments would not have been protected by the grandfather provision because they were not a bonus, retention, or incentive payment.

But Treasury officials took care of that. Rather than setting appropriate standards for executive severance payments generally, as the law passed by Congress required, the regulation leaves AIG free to pay excessive severance payments to many of its executives. Then, the American taxpayer gets the bill.

The Recovery Act told Mr. Geithner that he "shall" require each bailed-out company to meet appropriate standards for executive compensation. This command covers all types of executive compensation for all executives, not just bonuses for the most senior executives.

It is a command, not a suggestion. And the grandfather provision that protects certain bonuses does not apply to this more general provision.

But the Treasury regulation almost completely ignores this mandate. It does address one form of executive compensation. The regulation bars tax gross-up payments for senior executives.

That is the practice of allowing the company to pay the executive's income taxes for him. Now don't get me wrong -- tax gross-up payments should be banned for companies that were bailed-out, and I am glad to see that this was done.

But Congress gave Mr. Geithner a powerful tool that should have been used to curb other types of inappropriate executive compensation as well.

That includes tax gross-ups, extravagant severance payments, and other goodies Wall Street thinks it's entitled to.

Secretary Geithner should have used the tool as it was intended.  It's like using a big tractor to plow a little flower garden.

There's nothing wrong with banning tax gross-ups or planting flower gardens, but you could have done so much more with the tool you had.

If Secretary Geithner had done what he was directed to do in the law, we would not be witnessing this spectacle.

AIG is paying multimillion dollar severance payments at taxpayer expense to executives who chose to resign rather than work for the maximum salary of $500,000 per year set by the Special Master.

This is a scandal as far as I am concerned. The American taxpayer, as well as Mr. Feinberg, was outmaneuvered by Secretary Geithner and his staff. And it all happened before the Special Master's first day on the job.

There is another troubling matter that I must address. I mentioned earlier that the Treasury Department hired at least one Wall Street executive compensation lawyer from a firm that specializes in helping wealthy executives maximize their pay.

There is nothing wrong, as a general matter, with hiring talented people with expertise in technical legal subjects to draft regulations and administer the law.

But there are some red flags here that need a little sunshine.  We need to be sure that the people working on these issues at Treasury have dealt with any potential conflicts of interest carefully and openly.

Recently I learned that at least one Treasury official previously worked for Wachtell, Lipton, Rosen and Katz, a top Wall Street law firm.  Wachtell, Lipton has represented at least two former AIG executives.

The firm's job was to look-out for the interests of the executives, not the shareholders.  They were paid to make sure the compensation contracts, including severance provisions, were as generous as possible for their clients.

Wachtell, Lipton also represented Bank of America on its controversial Merrill, Lynch acquisition in 2008.  A Wachtell attorney who worked on that deal joined Treasury in the spring of 2009.

He said that he then worked on the Treasury executive compensation regulations.  These are the regulations I have been describing: the regulations that were to govern AIG, Bank of America and all of the other bailed-out companies.

This situation raises a host of questions, for example:

• How many other Treasury officials have similar potential conflict issues?

• Why wasn't the attorney recused from participating in the drafting of a regulation that was going to have a direct effect on Bank of America, his former client, and AIG executives, his firm's former clients?

• Did the attorney comply with the revolving door provision of the President's Executive Order, which prevents appointees from working on matters that relate to their former clients?

• The President has committed to publicly disclosing all the waivers issued to exempt appointees from his ethics executive order.  If this attorney recused himself, as he should have, why was that recusal not also disclosed so that the public would know about the potential conflict?

At a minimum there is the potential for an appearance of impropriety here.

What we know so far raises serious questions and red flags.  But there also are facts we do not know.

Therefore, I am asking that the Special Inspector General for TARP investigate these issues and report his findings to Congress and the public as soon as possible.

Specifically, I am asking the Inspector General to examine why Treasury did not set appropriate compensation standards pursuant to Section 111(b)(2) of the Recovery Act sufficient to prevent severance payments like those AIG recently paid to its former General Counsel and Chief Compliance Officer.

I am also asking him to determine whether Treasury officials working on executive compensation matters have fully complied with the revolving door provision of the President's Ethics Executive Order.

In the meantime, there are still numerous documents that I have requested that have not been provided to me despite assurance that I was going to get them.

There are many questions I have asked that remain unanswered, and I will continue to seek information on these issues.

I call on Secretary Geithner to stop stonewalling.  Oversight is important.  Oversight is necessary to protect the American taxpayer.  I take that duty seriously, and I am not going away.  American taxpayers deserve to know where their money is going.

YMCA Child Care Earns 5-Star Quality Rating

Scott County Family Y Is Among Few Area Providers To Achieve This Quality Assurance Level

Davenport, Iowa - March 23, 2010 - The Scott County Family Y Palmer Learning Center has earned a level 5 rating from the Iowa Department of Human Services - the highest quality assurance rating the state offers.

The Scott County Family Y Palmer Learning Center is one of only three licensed child care centers in Scott County to receive this rating, showing that the YMCA goes above and beyond state licensing standards.  "We believe that quality is an ongoing process and we continually strive towards maintaining and improving the quality of care we provide, said Deb Gustafson, Executive Director, YMCA Child Care & Family Services.  "This rating shows that our programs and staff are committed to nurturing the whole child, and his or her family, all while making sure they have a healthy and safe environment to grow and learn in."

The Iowa Quality Rating System for Child Care Providers (QRS) is a voluntary program that rates child care providers on quality indicators such as professional development; health and safety; environment; family and community partnerships; and leadership and administration.  Established in 2005 by the state legislature, QRS is designed to make providers aware of the many paths and steps they can take to improve the quality of their care.  The system also offers parents another resource in evaluating and selecting a child care provider.

As Scott County's largest child care provider, YMCA Child Care & Family Services offers a variety of educational programming for children beginning as young as 6-weeks with infant care to toddler and preschool programming. Before and after school child care is also available for children between the ages of 5 and 12.  Each Scott County Family Y child care site is state licensed and staff members receive extensive training and go through rigorous background checks.  Enrollment is open without decimation to any child and registration is first come, first serve.  For more information about the programs and services offered through the Scott County Family Y Child Care & Family Services, call (563) 323-4668 or visit www.ScottCountyFamilyY.org.

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(Kansas City, Kan., March 23, 2010) - The Des Moines-West Des Moines, Iowa, metropolitan area is tied for 24th on a list of U.S. metropolitan areas with the largest number of energy efficient buildings that earned EPA's Energy Star in 2009. The Des Moines-West Des Moines metropolitan area has 36 Energy Star labeled buildings. Energy efficiency saves building owners money and fights climate change.

"These cities see the importance of taking action on climate change," said Gina McCarthy, assistant administrator for EPA's Office of Air and Radiation. "Communities from Los Angeles to Louisville are reducing greenhouse gases and cutting energy bills with buildings that have earned EPA's Energy Star."

EPA first issued its ranking of cities with the most Energy Star labeled buildings last year. This year, Los Angeles remains in first place; the District of Columbia picks up second; Denver and Chicago move into the top five; and Lakeland and New York City are new to the top 10.

Continuing the impressive growth of the past several years, in 2009 nearly 3,900 commercial buildings earned the Energy Star, representing annual savings of more than $900 million in utility bills and more than 4.7 million metric tons of carbon dioxide emissions.

Since EPA awarded the first Energy Star to a building in 1999, nearly 9,000 buildings across America have earned the Energy Star as of the end of 2009, representing more than a 40 percent increase over last year's total. Overall annual utility savings have climbed to nearly $1.6 billion and greenhouse gas emissions equal to the emissions of more than 1 million homes a year have been prevented.

Energy use in commercial buildings accounts for 17 percent of U.S. greenhouse gas emissions at a cost of over $100 billion per year. EPA awards the Energy Star to commercial buildings that perform in the top 25 percent of buildings nationwide compared to similar buildings. Thirteen types of buildings can earn the Energy Star, including schools, hospitals, office buildings, retail stores and supermarkets.

View a list of the Top 25 Cities in 2009 with Energy Star labeled buildings: http://www.energystar.gov/ia/business/downloads/2009_Top_25_cities_chart.pdf

Access EPA's real-time registry of all Energy Star labeled buildings 1999-present:

http://energystar.gov/buildinglist