By David Lawder

WASHINGTON, April 1 (Reuters) - The U.S. House of Representatives on Wednesday opened debate on legislation to curb employee pay at financial firms that receive government bailouts, a bill that could supplant an earlier effort to heavily tax executive bonuses.

The "Pay for Performance Act of 2009" would give U.S. Treasury Secretary Timothy Geithner broad powers to "prohibit unreasonable and excessive compensation and compensation not based on performance standards."

The move comes in the wake of public anger over bonuses paid to employees of the American International Group unit that nearly collapsed the company.

It would replace the bill previously passed by the House of Representatives that aimed to impose a 90 percent tax on bonuses for certain executives at companies that receive taxpayer bailouts. That measure appeared to be losing momentum in the Senate.

The new legislation would allow the Treasury to provide the guidance on what is unreasonable or excessive, but it would be limited to only those companies that have received capital investments from the Treasury's $700 billion financial rescue fund.

"If you've received a capital investment of American tax dollars...to make it through these extraordinary times, there should be common-sense limits on bonuses," said Rep. Ed Perlmutter, a Colorado Democrat. "My constituents in Colorado don't want their hard-earned dollars going to inflate senior executives' life rafts as the ship steers close to the rocks."

The pay-for-performance bill and the earlier measure to tax bonuses are part of a legislative backlash sparked by the March 15 payment by AIG of $165 million in employee retention bonuses to employees of its AIG Financial Products unit, which made bad bets on credit default swaps and complex mortgage-backed securities. The retention payments were decided last year before the company was rescued by the government to the tune of nearly $180 billion, but the Obama administration determined that it was legally bound to make the payments.

The administration has vowed to try to claw back the bonus payments from AIG, in which the government now owns an 80 percent stake.