President Obama wants AIG bonuses rescinded

Posted by AzBlueMeanie:

Over the weekend it was disclosed that AIG, a company which is now on its third TARP bailout to rescue it from its bad bets on toxic debts, paid out $450 million in bonuses to its executives on Friday – presumably using the TARP bailout funds, and presumably because their executives had done such a fine outstanding job of destroying one of the largest companies in the world. A Treasury spokeman initially said the government had no bargaining power to prevent payment of the bonuses, ostensbly because AIG is contractually obligated to pay the bonuses. The perverse compensation incentives on Wall Street actually reward the destruction of a company?

The disclosure touched off a firestorm of populist outrage in Washington and in the media over the weekend.

House Speaker Nancy Pelosi announced that Congress will "examine legal options to recover taxpayer funds" from AIG, according to the speaker's blog, The Gavel. The Speaker even called the bonuses "unconscionable." (h/t to Susan G at Daily Kos)

While American workers see their wages decline and face record job losses, it is unconscionable that AIG, which is receiving more than $170 billion in government assistance, would permit such extravagant executive compensation practices without any accountability to the taxpayer.

I have asked Chairman Barney Frank of the House Financial Services Committee to examine options that are legally available to recover taxpayer funds of companies that abuse the privilege of taxpayer assistance.

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.

On Monday, President Obama addressed the bonus outrage:

Here's a transcript of President Obama's remarks (h/t Jed Lewison at Daily Kos), as prepared:

But before I talk about the new steps we’re taking to get credit flowing to small businesses across our country, I want to comment on the news about executive bonuses at AIG.

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

Under these circumstances, it’s hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. How do they justify this outrage to the taxpayers who are keeping the company afloat?

In the last six months, AIG has received substantial sums from the US Treasury. I’ve asked Secretary Geithner to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole.

I know he’s working to resolve this matter with the new CEO, Edward Liddy, who came on board after the contracts that led to these bonuses were agreed to last year. This isn’t just a matter of dollars and cents. It’s about our fundamental values. All across the country, there are people who work hard and meet their responsibilities every day, without the benefit of government bailouts or multi-million dollar bonuses. And all they ask is that everyone, from Main Street to Wall Street to Washington, play by the same rules.

That is an ethic we must demand.

What this situation also underscores is the need for overall financial regulatory reform, so we don’t find ourselves in this position again, and for some form of resolution mechanism in dealing with troubled financial institutions, so we have greater authority to protect the American taxpayer and our financial system in cases such as this. We will work with Congress to that end.

Monday afternoon the Wall Street Journal is reporting that "a White House official said the Treasury Department will use a planned $30 billion infusion into AIG to compel the company to repay the bonuses to employees of its financial-products group, which is responsible for selling the exotic financial instruments that brought the company to near-collapse."

"The infusion, announced March 2, won't be finalized until the company and the Treasury work up repayment options, the official said. The bonuses to the financial-products division were "found to be completely unacceptable given that AIG is already surviving on taxpayer funds," the official said." Obama Asks Geithner to Find Way to Rescind AIG Payouts

In addition, New York Attorney General Andrew Cuomo on Monday issued subpoenas to AIG seeking the names of those employees who received bonuses at the financial-products subsidiary. AIG has informed the attorney general's office that the bonus payments were made on Friday.

The subpoenas from the New York attorney general's office came after Mr. Cuomo on Monday morning asked for the names of bonus recipients, their jobs, their 2008 performance reviews and for the names of individuals involved in setting up the retention plan. In a letter, Mr. Cuomo gave the company until 4 p.m. to respond to his request for the information. His office has been investigating AIG bonuses since last fall.

"Covering up the details of these payments breeds further cynicism and distrust in our already shaken financial system," he wrote in the letter.

Mr. Cuomo said he is looking into whether any of the individuals receiving payments were involved in conduct that led to the insurer's near-collapse; whether the contracts may be unenforceable for fraud or other reasons; and whether the payments may be consider fraudulent conveyances under state law.

In a statement in response to Mr. Cuomo's subpoena, AIG said, "We are in ongoing contact with the attorney general and will respond appropriately to the subpoena." Obama Asks Geithner to Find Way to Rescind AIG Payouts

Former Clinton Labor Secretary Robert Reich explains The Real Scandal of AIG:

The administration is said to have been outraged when it heard of the bonus plan last week. Apparently Secretary of the Treasury Tim Geithner told AIG's chairman, Edward Liddy (who was installed at the insistence of the Treasury, in the first place) that the bonuses should not be paid. But most will be paid anyway, because, according to AIG, the firm is legally obligated to do so. The bonuses are part of employee contracts negotiated before the bailouts. And, in any event, Liddy explained, AIG needed to be able to retain talent.

AIG's arguments are absurd on their face. Had AIG gone into chapter 11 bankruptcy or been liquidated, as it would have without government aid, no bonuses would ever be paid; indeed, AIG's executives would have long ago been on the street. And any mention of the word "talent" in the same sentence as "AIG" or "credit default swaps" would be laughable if it laughing weren't already so expensive.

Apart from AIG's sophistry is a much larger point. This sordid story of government helplessness in the face of massive taxpayer commitments illustrates better than anything to date why the government should take over any institution that's "too big to fail" and which has cost taxpayers dearly. Such institutions are no longer within the capitalist system because they are no longer accountable to the market. So to whom should they be accountable? When taxpayers have put up, and essentially own, a large portion of their assets, AIG and other behemoths should be accountable to taxpayers. When our very own Secretary of the Treasury cannot make stick his decision that AIG's bonuses should not be paid, only one conclusion can be drawn: AIG is accountable to no one. Our democracy is seriously broken.

0 responses to “President Obama wants AIG bonuses rescinded

  1. Its time for The American People to take back our currency and OUR Treasury Department!

    We can not afford to wait until Obama’s teleprompter tells the brain dead President to FIRE TIM GEITHNER!

    Now we find out Geithner wrote the AIG bonus program while Chairnman of The New York Fed and when Paulson was the lying Treasury Secretery who LIED TO BUSH about AIG in the first place!

    Both these creeps were CEO’s of Goldmann Sach’s and refused when asked by Congress to reveal why they met with AIG CEO’s in PRIVATE and the meeting ended with a check TO GOLDMANN for billions and AIG for hundreds of billions!
    This was back in November when Geithner and Paulson knew about the bonuses!

    Do you all remenber in October when Obama said “IAM IN DAILY CONTACT WITH PAULSON??!!

    This was BEFORE the Election folks!

    My problem with Obama is his constant Lying and changing the story around to fit the day at hand.

    This is much different than Bush holding to a policy and not changing it!

    Its called by my kids LYING!!!!!!

  2. Mariana,

    You are right.

    http://arizona.typepad.com/blog/2006/04/dwight_leister_.html

    Guy calls himself an FDR democrat? I think he’s more of a James Buchanan democrat.

  3. Ladies and Gentlemen, I’ve voiced my suspicions a few weeks ago but now I am 99% sure: sheapenny is Dwight!!!

  4. bigbearchaseme

    Ms./Mrs./whatever sheapenny,
    You claim to be a Democrat. A true blue FDR Democrat. Yet you complain in a shrill voice about progressive Democrats. Yet who could argue that FDR was the most progressive Democrat that has ever held the office of POTUS. Honey, if only I could believe a word coming out of your mouth. You seem to have wandered here from either the Red State Trike Force, or have completely fallen off the rocker since Hillary didn’t get elected. Either way, your sophmoric reasoning(George Soros was responsible for the falling British Pound…..sheesh, to mistaking the TARP bill signed by Preznit Bush for the stimulus bill, to actually defnding George Bush, causing FDR to turn in his grave) and your kindergarten-like handle on the English language and grammar, you should probably stop reading this kind of material. You might just give yourself a stroke.

    Now, you may commence yelling at the kids to “Get off of my lawn!”

  5. Thats very nice, sheapenny! Thats going right on the refridgerator, right next to the macaroni unicorn you made during arts and crafts hour last week!

    Gold star!

  6. Steve:

    Get over it Bush is gone and from what I recall of the lead up to the War in Iraq; It was British Intel that Bush Quoted in his State of The Union Speech that Hillary Clinton was prompted to make a Senate Floor Speech saying the same thing!
    Saddam had weapons of mass destruction etc. and if you care to google Iraq weapons of mass destruction you will see they FOUND THEM and that report was filed with The United Nations at the time!
    BUSH DID NOT DEFEND HIS ACTS and that was his downfall in public opinion!

    As for me being Mr. sheapenny Iam a 82 year old woman Steve who saw a hell of alot more than you ever did and lived through the Real Great Depression of which this crap invented by Obama is NOT F.D.R. using a crisis to further his own Political position as is Comrad Obama but his Fireside Chats were to comfort WE THE PEOPLE!

    On the whole AIG thing I told you the truth and all of you defended the AXELROD explaination of what happened which was a LIE!

    You now are finding out through the Communist News Networks that Obama and Chris Dodd and Geithner KNEW ALL ABOUT THE RETENTION BONUSES last fall as just before the Stimulas bill was signed by Obama CHRIS DODD PUT IN A WAVER FOR BONUSES PAID ; AND THE COMMUNITY ORGANIZER SIGNED IT!
    OOOPPPS!

    You will also find out the TWO campaigns that received AIG money were guess who—— you got it OBAMA AND DODD???!!!!!!

    So now the question is how does AXELROD get his commander out of this mess his Goldmann Sachs Treasury Secretery got himinto or does HE FIRE THE TAX CHEAT!

    It amazes me that all of you supported a fairy tale and lie after lie comming from OBAMA, and he has saddled each of you with more Debt THAN YOU , YOUR CHILDREN OR EVEN YOUR GRANDCHILDREN COULD DREAM TO PAY , YET YOU ALL THINK SOCIALISM GONE AMUCK IS GREAT!!! HIP -HIP HORRAY!

    Now my last point!

    IAM A LIFELONG F.D.R. DEMOCRAT and I hated then and I hate now “PROGRESSIVES” who destroyed Germany and have now destroyed my Democratic Party!

    It has gotten so bad in the Congress and Senate Democrats from the REAL DEMOCRATIC PARTY are now forming groups to STOP THE PROGRESSIVE SOCIALIST MOVEMENT BY OBAMA, PELOSI AND REID and nothing from here on will be voted on unitil the Bills are read(as Obama the Liar promised,all bills would be posted on line for you and I to read 5 days BEFORE being voted on)and The Progressives have made a JOKE of The Democratic Party!
    We Democrats will save your assess once again but don’t you ever tell a Real Democrat ever again “To Leave The Country!”

  7. Gentlemen,

    Sheapenny is the guy on the corner wearing a tinfoil hat while screaming about the endtimes. He probably files his tax forms in blue crayon. It may be time to politely ignore him, at least until he starts expressing thought in coherent sentences.

  8. Hey Mr. Sheapenny:
    I’m embarassed that you call yourself an American. Where were you when Bush and Cheney lied to us about the Iraq war. Cheney says now that we accomplished our goal to set up a democracy in the heart of the Middle East. That’s the most bull— I’ve heard. He originally told us that Sadam had WMF and that was the reason we went in.

  9. HEY STEVE:

    I Don’t have to move to another Country BECAUSE I don’t recognize this one anymore!

    I have friends from Eastern Europe that are saying they went through this same Socialist Crap promised by the reform Communists so they voted for candidates backed at the time by a man named George Soros of Eastern Europe who financed there candidates!

    Now they find this Socialist funding in the millions the same Communist Crap he backed in Eastern Europe and his LOGO IS ON THIS WEB-SITE!!!!!!!!!!!!!!!!!!!!!

    Its happened folks you have been duped into supporting Socialism because of a Crisis INVENTED by George Soros as he brought down the British Pound as a moneychanger he orchestrated the Bank Defaults that gave Obama The Great the Election as one of the biggest October surprises in the History of our Elections!

    I will live to see you all leave this country in droves as Soros instills Communism on us all!

  10. Senator Chris Dodd added an amendment to the Stimulas Bill SIGNED BY COMMANDER OBAMA to “EXEMPT ALL BONUSES PAID THAT WERE PREVIOUSLY AUTHORIZED BY ANY BANK OR AIG!”

    The facts are Senator Dodd and the slobbering clown Barney Frank were informed in 2008 that these “RETENTION BONUSES” would be paid to hold employees from jumping to other companies!

    All of you falks are being played for FOOLS FOOLS FOOLS by OBAMA because HIS POLL NUMBERS HAVE TANKED AND HE NEEDS A CRISIS TO LEAD US TO THE PROMISED LAND!

    When are you going to realize we have been taken for a ride by this fake President who does NOT give a damn about you or me or anyone EXCEPT HIMSELF!

  11. This just in:
    “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.”
    — Sen. Charles Grassley, on AIG execs

  12. Hey sheapenny:
    Why don’t you move to another country! I lasted 8 years with the Bush Administration with all his lies and deceptions but I still supported the USA!

  13. Obama The Great can screw with everything in this County EXCEPT Insuring our injured Veterns; thats where the crap hits the road!

    Obama wants injured Vets from the Battlefield to get PRIVATE HEALTTH INSURANCE; yea sure Genius!!

    Obama wants top destroy the Private sector Insurance Companies so he has an excuse to NATIONALIZE ALL INSURANCE COMPANIES!

    Obama today spit on the Chief of Veterns affairs and made the Head Of Veterns Affairs very uncomfortable at Obama’s “ARROGANCE” and the Chief abrutly left the Oval Office.

    We as American’s should remember we are better than this creep from Chicago and never forget that our Soldiers serve at the will of The Government ,NO PRIVATE INSURANCE COMPANIES, and it has been our tradition to provide medical care when they are wounded.

    Just as I was shocked to see Obama run up to Marine One as the Marine saluted him upon his approah Obama The Great did NOT return a Salute but reached out to shake the hand of the Marine; who responded in kind with a slow hand movement to Obama The Great then returned to a salute!

    I do Not Mind electing Communist Socialist Progressives if that what the majority of the voters want; but don’t play games with the people who volunteer to defend you and me from Islamic Nazis and Terrorists!

    I want Obama to appologism NOW.

    Iam a member of Air Force Lodge Number 105 at Davis Monthan and we will contact our Congresswoman Giffords , who is in the Air National Guard to condemn Obama or we will unite and vote her out next election also!

  14. It sure would have made sense to put some guidelines in the tax payer money they handed out, instead of being in such a rush. Almost always, when you hurry you make mistakes.

  15. Here Obama goes again!

    Where do the bonuses go ; who do they go to?

    The Government Spendulas Bill has over 9000 earmarks that Obama said were BAD? But he signed it?

    Obama says even though the Earmarks are BAD they are good to jump start the economy!

    So Obama the genius should realize that the Bonuses ALSO stimulate the economy because the very bonuses that AIG paid out to its Democratic yuppies in the Banking Idustry that financed Obamas Camp[aign to the tune of 700 million Bucks will help buy the things that keep JOBS in Aircraft, Boating, Resorts, Etc. all of whom keep wage earners working.

    Remember folks its the Liberal Eletes in New York Banking and in Hollywood that paid for Obamas Election !

    He is now going on Jay Leno in Hollywood to express just that on Thursady!

    He said as did Chicken Little ‘”The Sky Is Falling” as long as it helped pass his porkulus bill and it worked!

    Now all of a sudden its NOT the Great Depression, Its Not a Crisis —-ITS OBAMA LAND!!!!!!!!!