Hill Outraged Over AIG Bonuses

Posted March 16, 2009 at 2:41pm

Congressional leaders spent Monday fuming over the “outrageous— and “unconscionable— news that American International Group Inc. doled out millions in executive bonuses after taking $170 billion in taxpayer bailout funds.

But it remains unclear what, if any, legal action lawmakers can take to recoup the money.

Speaker Nancy Pelosi (D-Calif.) said it is “unconscionable— that AIG is giving out $165 million in bonuses for 2008 as taxpayers are “footing the bill for the most expensive government rescue in history.— She called on the executives at the giant insurer to “renounce the bonuses and refuse the excessive retention pay they previously agreed to.—

Pelosi, in a statement Sunday afternoon, noted that she has tapped Financial Services Chairman Barney Frank (D-Mass.) to examine legal options to recovering the taxpayer funds.

In a Monday appearance on NBC’s “Today— show, Frank said he didn’t know what legal action could be taken at this point but suggested that Congress may be able to make AIG executives give up something else: their jobs.

“Maybe it’s time to fire some people,— said Frank, pointing out that the federal government now owns 80 percent of AIG. “We can’t keep them from getting their bonuses, but we can keep some of them from continuing in their jobs.—

Frank had little sympathy for other banks that are now coming forward saying conditions on their bailout dollars are so tough that they may quit the program altogether.

“My answer is goodbye, please leave quickly and send back the money,— the Massachusetts Democrat said.

The outrage from the Hill was echoed Monday morning by President Barack Obama, who instructed Treasury Secretary Timothy Geithner to pursue whatever means necessary to block the bonuses.

Rep. Elijah Cummings (D-Md.), a member of the Joint Economic Committee, said he doesn’t believe the government is powerless to do anything about the way taxpayer dollars are used.

It is “ridiculous— that Geithner and AIG Chief Executive Officer Edward Liddy are saying their contracts can’t be renegotiated, Cummings said Monday on ABC’s “Good Morning America.—

Liddy has also signaled that more bonuses are coming this year, Cummings said, “and we’ve got to stop that. And Geithner can do that.— Still, Cummings said he expects AIG to receive more bailout funds this year — and some are voicing outcry.

“I am reminded of the saying, Fool me once, shame on you. Fool me twice, shame on me,’— Rep. Phil Hare (D-Ill.) said in a statement. “The Treasury’s decision to pour more money into AIG was a mistake given their record.—

Rep. Darrell Issa (R-Calif.), ranking member of the House Oversight and Government Reform Committee, said the government can still halt the last batch of $30 billion in bailout funds from going to AIG. The government “can at any given time say, we’ve given up, file bankruptcy,’ and that would include this last $30 billion, which would allow them to, quite candidly, relook at these contracts,— he said.

Senate leaders, meanwhile, were equally disgruntled. The executive bonuses are “beyond outrageous,— and “every American is justified in their outrage at this breach of public trust,— Senate Majority Leader Harry Reid (D-Nev.) said.

Senate Minority Leader Mitch McConnell (R-Ky.) described the situation as “appalling— and urged the administration to use its full enforcement powers to get the money back.

At least one Senate Democrat is appealing directly to Geithner to see what legal options have been explored to cancel out the AIG bonuses. In a letter sent Sunday to the Treasury secretary, Sen. Russ Feingold (D-Wis.) said he is “deeply troubled— by the “staggering sum of money— being given out in AIG bonuses and questioned the firm’s defense of doing so.

Feingold joined other lawmakers in praising Obama for vowing to “pursue every legal avenue— to cancel out the bonuses, a pledge the president made Monday during a small-business event.