Lawmakers Reiterate Outrage Over AIG Bonuses

Posted March 18, 2009 at 10:52am

Democrats and Republicans voiced outrage at American International Group for paying bonuses to its traders and executives at a House subcommittee hearing on Wednesday, but differed sharply on what to do with the bailed out firm.

Financial Services Chairman Barney Frank (D-Mass.) repeated his call for a government takeover of the firm, and said lawsuits should be filed to recover the $165 million in employee compensation. Frank also said he would demand a subpoena if necessary to obtain names of AIG’s bonus recipients.

But Financial Services ranking member Rep. Spencer Bachus (R-Ala.) doesn’t want government to assume ownership of company operations, arguing the best solution may be to continue letting AIG’s new chief executive officer, Edward Liddy, and his team run the company.

“Do you think Congress can manage AIG? I don’t think so. Take a walk through the visitor’s center. … The solution here is not government running the company.—

He defended Liddy as a man who came in after the company collapsed and is being paid a $1 annual salary. And Bachus said there is shared culpability — including Congress’ failure to regulate AIG.

“The blame game ought to be secondary because we are all to blame,— he said.

Other committee Republicans ripped the overall series of government-issued bailouts and said there should be greater furor over the hundreds of billions already spent.

“Where was the outrage six months ago?— Rep. Scott Garrett (R-N.J.) asked. “The real outrage is the $170 billion of taxpayer money pumped into this company.—

Garrett said Treasury Secretary Timothy Geithner needs to answer for his role in the AIG saga, given that he was involved from the beginning. And Garrett noted that administration officials “still have not outlined an exit strategy.—

Geithner and Federal Reserve Chairman Ben Bernanke will testify on the Hill next week.

Rep. Paul Kanjorski (D-Pa.) said he had called Liddy about the bonuses earlier this year, and urged him not to distribute them because of the likelihood of a public outcry. “Unfortunately my advice went unheeded,— he said.

Other lawmakers meanwhile floated proposals to tax the AIG bonuses or force the company into bankruptcy.

The hearing is still ongoing, with Liddy still to testify.