Thoughts, essays, and writings on Liberty. Written by the heirs of Patrick Henry.

“In modern times, we are quick to "throw the rascals out," but it never occurs to us that rascality is imbedded in the office or that the power invested in it might make a rascal of an honest man.”     Frank Chodorov,    What Samuel Said about Solomon

March 17, 2009

Angry About The AIG Bonuses ? Blame Washington

by Doug Mataconis

As the Obama Administration tries to manage the blowblack from the revelations about the bonuses paid to AIG employees last week, it’s becoming exceedingly clear that this is a controversy created largely thanks to the incompetence and grand-standing at all levels of levels of government.

First of all, there’s the fact that Tim “Turbo Tax” Geithner approved the latest round of AIG funding without taking any steps to deal with the issue of the bonuses:

President Obama, seeking to quell anger from taxpayers whom he soon may have to ask to support another bailout, on Monday called for trying to block the $165 million in bonuses that American International Group paid to reward top executives even after taking billions of government bailout dollars.

Mr. Obama called the move an “outrage,” but administration officials spent hours Monday attempting to explain why Treasury Secretary Timothy F. Geithner gave AIG a new payout this month even though the bonuses had been on the books since last year.

Moreover, it’s clear that the issue of the bonuses themselves has been known in Washington since at least last September:

For all of the furor since details of the bonuses became public over the last several days, the issue of retention payments to A.I.G. employees globally has been percolating publicly since A.I.G. was bailed out in mid-September. About $1 billion in retention payments for 2008 and 2009 are in question, but the controversy involves about half of that, about $450 million over two years, that was intended for employees of A.I.G.’s financial products unit. That unit was the source of the financial derivatives blamed for the near-collapse at the heart of the economy’s downturn.

The Treasury and Federal Reserve officials said they had known about the bonus program as far back as last fall.

And, as if that’s not enough, only last month Congress passed and the President signed the stimulus bill, which included an Amendment that directly addressed the very issue we’re dealing with today:

While the Senate was constructing the $787 billion stimulus last month, Dodd added an executive-compensation restriction to the bill. That amendment provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009” — which exempts the very AIG bonuses Dodd and others are now seeking to tax.

The amendment made it into the final version of the bill, and is law.

Separately, Sen. Dodd was AIG’s largest single recipient of campaign donations during the 2008 election cycle with $103,100, according to opensecrets.org.

All of which leads to a question that needs to be answered by the Obama Administration and everyone in Congress whose beating the drum on this issue:

Why did it take so long for the president and senior lawmakers to get so worked up? More troubling, why did it take so long for them to discover AIG planned to give huge bonuses in the first place?

So, when you’re listening to politicians trying to exploit populist anger over the idea that a company that received a taxpayer-funded bailout paid out millions of dollars in bonuses, remember this —- the politicians who are acting angry now, are the same ones who let it happen.

It’s also worth taking note of the identity of those who have received campaign funds from AIG. As they say, money talks, others walk

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7 Comments

  1. [...] The Liberty Papers [...]

    Pingback by UrbanGrounds » Blog Archive » Obama, Geithner, and Dodd: The Three-Headed AIG Circus — March 17, 2009 @ 12:17 pm
  2. As a disabled tax payer, just making ends meet, I’m sick and tired of crooks giving our tax dollars away to some even bigger crooks ! Come next election,no now, lets stop blaming and start taking action to get rid of crooked politics and crooked business!

    Comment by mike — March 17, 2009 @ 2:52 pm
  3. No, I am not angry, or at least, not at AIG.

    If Congress had let AIG go under, a bankruptcy judge would have had the power to alter those contracts so the bonuses were not paid. However, Congress declared that AIG was “too big to fail,” and gave them our money, which means that AIG is contractually required to pay those bonuses.

    So, Congress prevented AIG from having to make the hard decisions, and now is angry that they maintained the status quo.

    Comment by Merf — March 17, 2009 @ 5:18 pm
  4. I met a person at a bar/grill Sunday evening with my husband (who is in the insurance business).. and this fellow turned to us because during the NCAA selection program, we talked about the companies stock going from $4 – $7 the past week, which was kind of sickening humor because a year prior, it was at $64.

    This fellow turns and makes small talk for about an hour and then tells us, he is with AIG. Sunday evening at 5pm Central Time) and I pop him gently on the arm saying… hey, how about that bonus… Would you Also like me to pay your bar tab??
    He said, I deserved that

    Comment by Karen Moore — March 17, 2009 @ 9:41 pm
  5. And then Grinned ear to ear

    Comment by Karen Moore — March 17, 2009 @ 9:44 pm
  6. I’m not sure I made it clear, but my husband is NOT with AIG – he is w/ a company that is struggling and he’s been there 24 years working his butt off for a pretty meager salary. This “fellow” thought it was funny that he deserved a rib poking about his bonus from AIG. FUNNY? NOT REALLY! And Yes, I am MAD.

    MAD that Nothing is honest or transparent in Washington DC, no matter who is pres or any contingents.

    MAD because we leave a very modest lifestyle and are now sacrificing even more for whom & what?

    MAD because my kids and their kids will paying this bill X 100.

    Comment by Karen Moore — March 17, 2009 @ 9:55 pm
  7. hopefully card check wont come back thatd be a soft tyranny

    Comment by Edia Mart — March 24, 2009 @ 11:37 am

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