Growing Chorus of Lawmakers Outraged by AIG Bonuses

[oldiebutgoodie]

A growing bipartisan chorus of lawmakers are condemning insurance giant AIG for deciding to pay out $165 million in bonuses despite receiving $170 billion in taxpayer bailout funds and some are demanding that AIG renounce the bonuses - or else.

Senator Russ Feingold sent a letter to Treasury Secretary Timothy Geithner, urging the Obama administration to explore "legal options" to prevent the millions in AIG payouts, reports CNN.

"I write to ask why any bonuses would be legally required, given the company's abysmal performance," says Feingold, D-Wisconsin.

Feingold asked whether the bonuses could be canceled or recouped from recipients, and whether the administration will sue AIG executives for breaching their duties to shareholders.

And some Obama administration officials seem amenable to that position.

Christina Romer, chair of the White House Council of Economic Advisers, told NBC's "Meet the Press":

"Can I say, we're -- we're the first people to be angry. So absolutely Secretary Geithner has been furious and has been pushing back, urging them to renegotiate this. We're pursuing every legal means to deal with it."

House Speaker Nancy Pelosi issued a written statement calling the pay-outs "unconscionable" and said Congress would seek to "recover taxpayer funds of companies that abuse the privilege of taxpayer assistance," reports Fox News:

"I call upon the executives at AIG to right the wrong they have done to American taxpayers, who are footing the bill for the most expensive government rescue in history. They should renounce the bonuses and refuse the excessive retention pay they previously agreed to," Pelosi said.

Rep. Elijah Cummings, D-Md., also released a written statement Sunday calling on AIG Chairman Edward Liddy to step down.

And Rep. Barney Frank, the chair of the House Financial Services Committee, said it was "wrong" on Fox News. "This is an example of people at the commanding heights of the economy misbehaving, abusing the system."

MORE...

Since the American people now "own" about 78% of AIG, don't we get a vote in how "our" company is run? Are the bosses of AIG not accountable to us? Apparently not if AIG is legally (contractually) bound to pay out those bonuses. I predict a lot of outraged huffing and puffing and foot-stomping and fist-pounding but in the end, even nationalizing AIG at this point can't retroactively break legally binding contracts.

AIG's abuses and scams on the American people won't last forever. People are struggling to stay in their homes and pay medical care costs and just buy a few groceries and these fat cats are looting a bailed-out company for millions and millions of dollars just because they can. I think AIG is writing its own obit -- the company that arises from its ashes is going to be run a bit differently. Just my .02.

[oldiebutgoodie]

Obama berates AIG and vows to try to block bonuses

WASHINGTON – Joining a wave of public anger, President Barack Obama blistered insurance giant AIG for "recklessness and greed" Monday and pledged to try to block it from handing its executives $165 million in bonuses after taking billions in federal bailout money. "How do they justify this outrage to the taxpayers who are keeping the company afloat?" Obama asked. "This isn't just a matter of dollars and cents. It's about our fundamental values."

Obama aggressively joined other officials in criticizing American International Group, the company that is fast becoming the poster boy for Americans' bailout blues.

[...]

"This is a corporation that finds itself in financial distress due to recklessness and greed," Obama declared.

He said he had directed Treasury Secretary Timothy Geithner to "pursue every legal avenue to block these bonuses and make the American taxpayer whole."

[...]

Bailout steps for AIG totaling over $170 billion since September have effectively left the federal government with an 80 percent stake in the faltering insurance giant.

[...]

Obama's sharp words continued an insistent administration drumbeat over the past few days designed to pressure the bonus recipients to forgo them. Thus far, American International Group officials have refused to rescind the payments.

[...]

Outcries against the company have also come from congressional leaders.

"I call upon the executives at AIG to right the wrong they have done to American taxpayers, who are footing the bill for the most expensive government rescue in history," House Speaker Nancy Pelosi, D-Calif., said Monday.

Senate Republican Leader Mitch McConnell called the bonuses "appalling" and said he hoped "the administration gets the message from the taxpayers on this issue."

MORE...

[cookie]

AMEN! bout time they got outraged!

[oldiebutgoodie]

Sen. Charles Grassley is so angry over AIG bonuses that he says the executives should resign or kill themselves.

In a comment aired this afternoon on WMT, an Iowa radio station, Grassley (R-Iowa) said: “The first thing that would make me feel a little bit better towards them if they’d follow the Japanese model and come before the American people and take that deep bow and say I’m sorry, and then either do one of two things — resign, or go commit suicide.”

READ THE REST OF THE STORY HERE

Wow, Chuck, tell us how you really feel.   

[cookie]

I had to chuckle when I heard that....
all of those CEOs should step down in my opinion....get some good people in there who can do the job...

[oldiebutgoodie]

Lawmakers who opposed Wall Street salary caps now joining AIG Outrage Bandwagon... huh? That kinda sorta doesn't make any sense.   

When Congress debated limiting executive pay last month, some in that august body were adamantly opposed to such caps. Here's what a couple of them have had to say on the subject:

SENATOR MITCH MCCONNELL:  "I really don’t want the government to take over these businesses and start telling them everything about what they can do."  [ABC News, 2/4/09]

SENATOR RICHARD SHELBY: "It should be up to the board of directors of a private corporation to set the compensation of an executive..."  [Washington Post, 9/23/08]

Now that outrage is mounting over the $165 million in executive bonuses paid to AIG staffers, it seems these fellows (and more, besides just them) are doing a bit of backpeddling. Here are their latest statements:

SENATOR MITCH MCCONNELL: “Well, it is an outrageous situation. I wrote Secretary Paulson back in October complaining about the way AIG had been doing its business. […] This is an outrage.” [ABC News, 3/15/09]

SENATOR RICHARD SHELBY: “We ought to explore everything that we can through the government to make sure that this money is not wasted. […] A lot of these people should be fired, not awarded bonuses. This is horrible. It’s outrageous.” [AP, 3/16/09]

Not all conservatives have backtracked from their previous positions on executive compensation. Rush Limbaugh, on his program yesterday, said, “I am all for the AIG bailouts, and I am all for the AIG bonuses. Well, I’m not for the bailouts, well, in a way I’m for the bailout because I’m for the bonuses.”

Things that make you go "Hmm..."

SOURCE

[WhiskeyGirl]

I think lawmakers should be looking into why AIG paid off banks, foreign and domestic.   That should be the outrage and investigation.  Conflicts of interest?  Hmmm...

[nonesuche]

I think lawmakers should be looking into why AIG paid off banks, foreign and domestic.   That should be the outrage and investigation.  Conflicts of interest?  Hmmm...

I agree WG........we also don't need to underestimate the role which Geithner has played in less oversight here than should have been required.

[oldiebutgoodie]

The Obama Administration's Treasury Department pushed to strip language that would have restricted the bonuses paid to staffers of bailed-out companies from the stimulus bill, a Democratic senator revealed late Wednesday.

Senate Banking Committee Chairman Chris Dodd (D-CT) disclosed that he was responsible for inserting a clause into the stimulus bill that allowed bailed-out firms to continue forward with eye-popping bonuses to executives that may have shared responsibility for some of the companies' woes in the first place.

In a step further, though, he told CNN that the language was sought by the Obama Administration's Treasury Department, which feared that the government would face lawsuits by including the provision.

A senior Treasury Department official purportedly confirmed Dodd's assessment. It remains unclear whether the Treasury Department knew the insurance behemoth AIG planned to pay some $165 million in bonuses to employees at the time.

[...]

His account adjoins a report Thursday in the Washington Post, which alleges that neither the White House nor the Treasury Department were told of AIG's bonuses until just before they were publicly announced, though the Federal Reserve had known for months.

[...]

Treasury Secretary Timothy Geithner told the Post that he had not been aware of the size of the bonuses and the timing of the payments.

"I was stunned when I learned how bad this was on Tuesday [March 10]," Geithner told the Post. "I shouldn't have been in that position, but it's my responsibility and I accept that."

Geithner met with his staff and considered options, but concluded that the government could not change contracts for work that had already been done.

SOURCE

So, okay, it's nobody's fault. Nobody saw it coming. Nobody knew what hanky-panky AIG was up to. So..... I have only one question:

Who was minding the store??????

I understand that varying departments of an administration are run almost semi-autonomously under the directorships of the Cabinet officials and federal officials that are their titular heads but ultimately, the responsibility is with the guy who hired them (in the hope they were competent to do their jobs).

To his credit, President Obama has taken on Harry Truman's refrain of "the buck stops here" and accepts responsibility but aside from that, WHAT HAPPENED?

How did AIG get away with this outrage? How does it make any kind of sense to reward execs who drove and scammed a company into the ground? HOW DOES THAT MAKE SENSE? And should we, the American people, bankroll this specific folly? I'm not talking about bailing out Wall Street in general or the banking industry or the insurance industry in general... that's yet another issue. I'm talking solely about these obscene bonuses to a bunch of scammers who destroyed a company. How does it make sense to reward that?

At least now our federal government, recognizing that it cannot legally take away the bonuses simply by coopting them in direct fashion, has decided to put them on a tax rate of 90%. Same practical effect but now nicely legal.

[oldiebutgoodie]

Fed knew of AIG bonuses, failed to tell Obama

WASHINGTON (AFP) - US Federal Reserve officials knew about the controversial AIG bonuses but did not tell Treasury or White House officials for months, the Washington Post reported Thursday.

The American International Group informed the Fed three months ago that it would pay 165 million dollars by March 15 to employees in their Financial Products unit, the Post reported, citing government and company officials.

[...]

Geithner then briefed a senior White House aide, who informed Obama on March 12, the day before they were paid out, the Post reported.

[...]

The US government rescued the insurance giant because it believes that its intricate web of ties with banks worldwide posed an imminent risk of financial collapse not just for the United States but globally.

SOURCE

[oldiebutgoodie]

FROM A TIME MAGAZINE ARTICLE:

The Treasury Department official says the fault appears to lie with career staffers at the department who failed to report the imminent bonus deadline up the chain to Geithner. This failure may be a by-product of the difficulty Geithner has had staffing up at Treasury. But he still has personal vulnerability on the issue. It was Geithner, as head of the New York Federal Reserve, who negotiated the AIG bailout last September. At that time, he could have sought to get bonuses repealed as part of the massive government loan.

Geithner's supporters argue that the AIG bailout was pulled together in less than one business day and that it's understandable that the bonus issue was not central to those negotiations. They also argue that in subsequent negotiations with AIG and others about further infusions of government cash, Geithner has imposed tough conditions limiting bonuses and executive compensation.

SOURCE

[oldiebutgoodie]

FLASHBACK: In October, Obama Said That AIG Executives ‘Should Be Fired’ For Their Excesses

Earlier this week, after the AIG bonuses were revealed, Rep. Barney Frank (D-MA) called for the replacement of company executives. “Since the federal government … now essentially owns that company, maybe it’s time to fire some people.” Frank told ThinkProgress that, “when you are trying to undo something, it is often not the case that the people who did it are the ones to put in place.” So far, however, the administration has not embraced Frank’s call.

Last fall, as Wall Street crumbled and just one week after the federal government bailed out AIG, the firm’s executives spent $440,000 on manicures, facials, pedicures, and massages at a luxury resort in California. At the time, Obama was a vocal proponent of firing AIG executives. During an October 7, 2008 presidential debate with Sen. John McCain (R-AZ), candidate Obama declared, “those executives should be fired”:

OBAMA: It means we are cracking down on CEOs and making sure that they are not getting bonuses or golden parachutes as a consequence of this package [TARP]. In fact, we just found that AIG — a company that got a bailout — just a week after they got help, went on a $400,000 junket. I’ll tell you what. Treasury should demand that money back, and those executives should be fired.

Watch it:

<a href="http://www.youtube.com/v/X-oREoJ9FTM&amp;hl=en&amp;fs=1" target="_blank">http://www.youtube.com/v/X-oREoJ9FTM&amp;hl=en&amp;fs=1</a>

[/center]

In October, the revelations about AIG’s luxury retreat sparked widespread outrage, just as the AIG bonuses are doing today. That didn’t stop AIG, however. In November, the Washington Post reported that AIG “plans to pay out $503 million in deferred compensation to some of its top employees, saying it must tap the funds to keep valuable workers from exiting the troubled insurance giant” — the same rationale AIG CEO Edward Liddy is using today.

UPDATE:  Speaking to reporters outside the White House this afternoon, Obama took full responsibility for the White House's handling of the bonus issue, as Greg Sargent noted. "Asked if he wished he’d known about the bonuses sooner, Obama said, in the course of answering: 'Ultimately, I’m responsible. I’m the President of the United States…The buck stops with me.'

SOURCE

[nonesuche]

Too bad that Obama's choice for leadership of the Treasury is at the heart of this along with the Federal Reserve?

Obama, are you minding our store?

Stating the buck stops here doesn't wash with me, prove it before the fact, not after please.

[oldiebutgoodie]

13 Firms Receiving Billions Of Dollars In Bailout Money Owe Back Taxes

WASHINGTON — At least 13 firms receiving billions of dollars in bailout money owe a total of more than $220 million in unpaid federal taxes, a key lawmaker said Thursday.

Rep. John Lewis, D-Ga., chairman of a House subcommittee overseeing the federal bailout, said two firms owe more than $100 million apiece.

"This is shameful. It is a disgrace," said Lewis. "We are going to get to the bottom of what is going on here."

The House Ways and Means subcommittee on oversight discovered the unpaid taxes in a review of tax records from 23 of the firms receiving the most money, Lewis said as he opened a hearing on the issue.

The committee said it could not legally release the names of the companies owing taxes. It said one recipient had almost $113 million in unpaid federal income taxes from 2005 and 2006. A second recipient owed almost $102 million dating to before 2004. Another was behind $1.1 million in federal income taxes and $223,000 in federal employment taxes.

"If we looked at all 470 recipients, how much would they owe?" Lewis asked.

Lewis said the panel plans to review tax records from other firms receiving federal money, but he was unsure if it would look at every firm.

"We're not done," he said.

MORE...

This makes me want to scream. Us little people can't get refunds due or anything from the feds if there is any dispute over taxes. I fought the IRS myself for about four years because they said my Mom owed thousands of dollars in taxes for interest earned on an annuity and when I finally forced them to acknowledge that the company with the annuity had inadvertently reported the entire principal of our savings rather than the interest earned, the IRS said, "Oops. Our bad." And I MADE them give me back interest on money that money could have earned if it had been in our safekeeping. Heck, you know they charge daily interest on owed back taxes so what's good for the goose and all that...

But, what the hey???? How does some company get billions of dollars in a government handout when they owe millions in back taxes???

I don't get it.

[NOTE TO ADMIN: WE NEED A SEVERELY PISSED-OFF MONKEY TO SHOW HERE]

[oldiebutgoodie]

Just for argument's sake, let's take Nancy Pelosi at face value here and assume every word attributed to her in this article is the truth (even if you don't like her personally or agree with her politics).

The article tickles my gallows humor funnybone because it seems that EVERYBODY ALONG WITH THEIR AUNT AND UNCLE AND DISTANT COUSINS are trying to get out from under, to escape responsibility for the AIG bonuses scandal and Ms. Pelosi is certainly no exception.

In fact, it seems that the only one to stand up and say the buck stops on their desk a la Harry Truman is President Obama but he hardly has any choice to say otherwise, does he?

Anyway, here's Nancy making sure that YOU know this mess over the AIG bonuses did not start in the House of Representatives:

House Speaker Nancy Pelosi (D-Calif.) spoke with reporters Thursday to make what she sees as a crucial point regarding the stimulus language that ultimately allowed AIG executives to reap $165 million in bonuses: Look to the Senate and the White House, not the House of Representatives.

"It was never part of the conference bill," she said. "This never came to the House side. You can talk to any of our conferees. It's a matter of fact and record."

The House-passed version of the stimulus did not contain any language about executive compensation. The House passed tough restrictions on executive compensation -- over GOP objections -- as part of Rep. Barney Frank's bill dealing with oversight of the bank bailout. That legislation has not been taken up in the Senate.

Pelosi was asked repeatedly about why the House approved the final conference report that included the compensation language. "This was a Senate -- I'm going to cut you off -- this was Senate/White House -- this is Senate-White House language," she said. "That is what we're talking about here, and so, again, we are already on record with even stronger language in legislation we passed."

It was the Senate, Pelosi argued, that debated with the White House over what executive compensation language to put into the stimulus. "The language that related to this was in the Senate bill," she said. "Our record is clear on this subject. If you want to talk about what happened in the Senate, go on the Senate side."

LINK

[oldiebutgoodie]

House Passes Bill Taxing AIG Bonuses, Republicans Switch Votes In Droves

The House overwhelmingly passed legislation on Thursday to tax bonuses paid out by AIG and other bailed-out firms at a rate of 90 percent. "We want our money back and we want our money back now for the taxpayers," said Speaker Nancy Pelosi (D-Calif.)

But the measure passed, 328-93, only after a hectic scene in which dozens of Republicans switched their votes from no to yes.

[...]

A senior House Republican aide said that Minority Whip Eric Cantor (R-VA.) did not whip the vote and that members were free to vote however they chose. Cantor voted yes. Minority Leader John Boehner (R-Ohio) voted no.

SOURCE

Sure, there is an element of political grandstanding in all this but it doesn't much matter to me if individual lawmakers paint themselves as heros with constituents as long as there is accountability to the American people and I think, since WE own nearly 80% of AIG, that we are entitled to have some say. If we don't want to reward execs for scamming a company into the ground, there ya go. It is our company now. We own it.

[WhiskeyGirl]

Fed knew of AIG bonuses, failed to tell Obama

WASHINGTON (AFP) - US Federal Reserve officials knew about the controversial AIG bonuses but did not tell Treasury or White House officials for months, the Washington Post reported Thursday.

The American International Group informed the Fed three months ago that it would pay 165 million dollars by March 15 to employees in their Financial Products unit, the Post reported, citing government and company officials.

[...]

Geithner then briefed a senior White House aide, who informed Obama on March 12, the day before they were paid out, the Post reported.

[...]

The US government rescued the insurance giant because it believes that its intricate web of ties with banks worldwide posed an imminent risk of financial collapse not just for the United States but globally.

SOURCE

Odd thing about this...didn't Obama's good friend and financial adviser tell him about the money Goldman got from AIG?  The billions of taxpayers money funnelled through AIG to Goldman?

Why didn't Goldman ask directly?  Billions is much more than millions.

jmho