Angry About The AIG Bonuses ? Blame Washington
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.
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