U.S. House Speaker Nancy Pelosi, D-Calif., urged caution on legislation aimed at stopping bonuses for executives at the American International Group Inc. (AIG), saying she wanted to limit "collateral damage" to middle-income workers.

Pelosi said that any legislation sent to the president would have to be tailored to ensure that it didn't hurt those who received additional payments as part of their compensation package.

"It is not uncommon for middle-income professionals to get bonuses, and they shouldn't have to pay the price for people making millions of dollars a year who had the arrogance to insult the intelligence of the American people," Pelosi said.

A bill passed in the House March 19 would tax bonuses paid by firms that received more than $5 billion from the Troubled Asset Relief Program, or TARP, as well as bonuses paid by Fannie Mae (FNM) and Freddie Mac (FRE). It would impose a 90% surtax on bonuses, effective retroactively for payments received after Dec. 31, 2008. The levy would be in addition to existing income taxes, and would apply to individuals earning more than $250,000.

Pelosi's remarks come after House Majority Leader Steny Hoyer, D-Md., said Wednesday that if more AIG executives paid back their bonuses, legislation "might not be necessary."

The Senate hasn't taken up its own version of bonus legislation, and Senate Majority Leader Harry Reid, D-Nev., said Thursday that congressional leaders and President Barack Obama had agreed to a "time-out" on the issue. He said the Senate wouldn't take up bonus legislation before a two-week break scheduled to begin April 6.

"We're going to work on the budget next week, and we don't have the ability to bring it up on the floor next week anyway, so we'll see what the timeout brings us," Reid said. "We'll have two weeks that we're going to be home for the recess, and if this is an issue we have to proceed on when we come back, we'll do it."

Pelosi didn't say Congress should abandon its efforts to send the president a bonus-related bill, but said House passage of the bill may have had a positive effect even if it wasn't enacted.

"I think the bill we passed served a very good purpose," Pelosi said. "It put the spotlight on the AIG abusive bonuses...and it still may pass in the Senate."

-By Patrick Yoest, Dow Jones Newswires; 202-862-3554; patrick.yoest@dowjones.com