Admittedly, I cannot locate a reference to who the Dem lawmakers were, but if the libs can accept whatever is printed in the NYT w/o question, this should not be a problem.
March 20, 2009
Many in Government Knew Weeks Ago About A.I.G. Bonuses
By EDMUND L. ANDREWS and JACKIE CALMES
WASHINGTON — The question was direct and prescient. Representative Joseph Crowley, Democrat of New York, asked the Treasury secretary in an open hearing what could be done to stop American International Group from paying $165 million in bonuses to hundreds of employees in the very unit that had nearly destroyed the company.
Timothy F. Geithner, the Treasury secretary, responded by saying that executive pay in the financial industry had gotten “out of whack” in recent years, and pledged to crack down on exorbitant pay at companies like A.I.G. that were being bailed out with billons of taxpayer dollars.
The exchange took place before the House Ways and Means Committee on March 3 — one week before Mr. Geithner claims he first learned that the failed insurance company was about to pay a round of bonuses that have since caused a political uproar.
A Treasury spokesman, Isaac Baker, said in a statement on Thursday night, “Although Congressman Crowley raised the issue of the bonuses two weeks ago, Secretary Geithner was not aware of the timing or full extent of the contractual retention payments or the other bonus programs until his staff brought them to his attention on March 10.”
Mr. Baker said that after Mr. Geithner had been briefed on the bonuses, he called Edward M. Liddy, the chief executive of A.I.G., and “insisted that they be renegotiated and restructured, in light of the extraordinary assistance being provided by taxpayers.”
Mr. Baker added that Mr. Geithner “takes full responsibility for not being aware of these programs before last week.”
Interviews with senior Federal Reserve and Treasury officials, as well as members of Congress, leave little doubt that the bonus program was a disaster hiding in plain sight. Mr. Geithner is not the only one who appears not to have understood the populist fury the bonuses would set off.
Career staff officials at the Treasury, Fed and Federal Reserve Bank of New York exchanged e-mail messages about the A.I.G. bonus program as early as late February, according to a person familiar with the matter. A.I.G. itself revealed the bonus plan in regulatory filings last September.
In November, when the bailout of A.I.G. was restructured, Treasury and Fed officials negotiated the terms under which A.I.G. could make the retention payments. And in December, Democratic lawmakers sought a hearing about the payments.
A.I.G., which incurred staggering losses through its sale of complex financial instruments tied to mortgage-backed securities, has received more than $170 billion in capital infusions, loans and credit lines from the federal government since last September, and is about to get $30 billion more.
A.I.G. executives have insisted that they informed the New York Fed about the bonus plan, and that they assumed the New York Fed was informing the Treasury.
Treasury officials have suggested that the New York Fed and the Federal Reserve Board in Washington failed to alert the Treasury staff until March 5. And Fed officials said that they not only alerted the Treasury staff weeks earlier, but discussed the issue with them via e-mail.
Despite the interagency discussions in February about A.I.G.’s ill-starred bonus plan, as well as Mr. Geithner’s exchange on the matter in a hearing, Mr. Geithner continued to insist on Thursday that he had not really understood the magnitude of the bonuses until one week ago.
“I was informed by my staff of the full scale of these specific things on Tuesday, March 10,” Mr. Geithner said in an interview with CNN on Thursday. “As soon as I heard about the full scale of these things, we moved very actively to explore every possible avenue — legal avenue — to address this problem.”
As early as December, two Democratic lawmakers had vociferously and repeatedly complained about the bonuses, and one of them went so far as to demand the resignation of A.I.G.’s chief executive.
But both Mr. Geithner, and the chairman of the Federal Reserve, Ben S. Bernanke, were preoccupied at the time with multiple crises. The nation’s banks were reeling from as much as $2 trillion in mortgage-related losses. The recession was deepening and unemployment was soaring.
Mr. Bernanke’s team at the Fed and Mr. Geithner’s team at Treasury, moreover, were reluctant to impose what they viewed as “punitive” and possibly self-defeating pay restrictions on companies being bailed out.
In early February, Mr. Geithner opposed a provision in the economic stimulus bill that would have slapped a steep tax on the kind of bonuses that A.I.G. was about to pay.
If A.I.G.’s plan to pay out an additional $165 million in bonuses came as a surprise to Mr. Geithner, it did not come as a surprise to staff at the Treasury, the Federal Reserve in Washington or the New York Fed.
Staff at all three agencies had been in daily communication with each other about A.I.G. ever since the Fed agreed to lend the company $85 billion in September in exchange for almost 80 percent of the company.
In late November, after A.I.G.’s plight became worse and the Treasury jumped in with a $40 billion capital infusion, the three agencies negotiated cuts in bonuses and salaries for many of the company’s top executives.
Officials at the New York Fed carried out the most direct oversight of A.I.G., and they were well aware of the coming bonus payments, said a person familiar with the matter.
Are we to believe that Pres. Obama was in the dark on this whole subject? I mean, AIG is being touted as being at the root of the financial crisis and that its failure would have triggered a collapse of the world economy. Yet, people in several areas of the government were not keeping the White House informed?
Posted on Thu, Mar. 19, 2009
Obama tells Leno he was stunned at news of AIG bonuses
BURBANK, Calif. | President Barack Obama said Thursday on “The Tonight Show” that he was stunned when he learned of the bonuses that bailed-out insurance giant AIG was paying its employees.
Obama told host Jay Leno that the payments raised moral and ethical problems — and that the administration was going to do everything it could to get the money back.
But Obama added that the bigger problem is the culture that allowed traders to claim them.
He said that has to change if the economy is to recover.
Obama also said his embattled treasury chief, Timothy Geithner, is doing an “outstanding job.”
Listing the recession, the banking crisis and the need to coordinate with other countries, Obama acknowledged Geithner is “on the hot seat.”
But he said too many in Washington were trying to figure out whom to blame for things — when they should be focused on fixing them.
According to NBC, Obama is the first sitting president ever to appear on “The Tonight Show.” He appeared twice as a candidate.
In his opening monologue, Leno said lots of people were surprised that Obama would come on NBC — figuring he’d be tired of big companies on the brink of disaster with a bunch of overpaid executives.
Leno also joked about the dismal state of the economy, saying it’s so bad Obama flew to California on Southwest Airways — making nine stops.