Geithner Confirms Treasury Asked Dodd For Bonuses Loophole
Treasury Secretary Tim Geithner has confirmed that his department did press Sen. Chris Dodd (D-CT) to water down the executive-bonus limits included in last month's stimulus bill, delivering a boost to the beleaguered Dodd -- but at a greater potential cost to his own damaged credibility on Capitol Hill.
In an interview set to air later today on CNN, Geithner took "full responsibility for the situation" and said "calls for resignation are part of the job," according to an early report on the network's website.
Late Update: The full exchange between CNN's Ali Velshi and Geithner is posted after the jump. It's notable how rapidly the media has become fixated on this change to the Dodd amendment ... considering that most mainstream news outlets were fudging the truth on it just days after it became law.
VELSHI: Let's just talk a little moment again about those payments and the legal ramifications of doing anything about it. Senator Dodd says that he had a clause that was put into the stimulus bill that basically allowed these payments to be made to people at AIG in this particular unit and he says that somebody at Treasury asked him to put it in.GEITHNER: Let me just start by saying that Chairman Dodd has played an enormously important leadership role in this and he's doing the right thing in trying to make sure that the assistance we provide don't go to benefit people that shouldn't benefit from these things. And I am enormously impressed by the importance of what he's trying to do in this case.
VELSHI: But somebody - have we figured out who told him to put this clause in?
GEITHNER: This provision? We expressed concern about this specific version. We wanted to make sure it was strong enough to survive legal challenge. But we also worked with him to strengthen the overall framework and his bill has this very important provision we're relying on now to go back and see if we can recoup payments that were made that there was no legal ability to block.
VELSHI: But inadvertently might somebody at Treasury have told Senator Dodd to do something that has now resulted in these payments not being able to ...
GEITHNER: No, again, what we did is just express concern about the vulnerability of a specific part of this provision, the legal challenge, as you would expect us to do, that's part of the legislative process, but again, his bill also has this very important provision that allows us to go back and see if we can recoup these payments and we're going to explore that, but in any case we're going to make sure that the American people are compensated for any payments we can recoup.
VELSHI: Do we know who in Treasury had this conversation with whomever on the banking committee?
GEITHNER: Treasury staff were working Senator Dodd's staff throughout this process. Again, that's part of the legislative process.
VELSHI: But you weren't involved in that directly?
GEITHNER: I did have with other officials some conversations with Chairman Dodd as he was going through this process but other provisions.
VELSHI: So not about this particular one. It wasn't you telling ...
GEITHNER: No, but I'm not sure that's relevant because Treasury staff did express concern about whether this provision was vulnerable to legal challenge.
Josh
Elana
Matt
Eric
Boy, you've really got Geithner in the crosshairs now!
Too bad Obama isn't reading TPM all day.
March 19, 2009 4:00 PM | Reply | Permalink
Dorn seriously, Elana and TPM in general have gotten pummelled in the comments for staying on this story. Isn't that the same thing they did with the US Attorney's scandal? Aren't they supposed to be muckraking and getting down to the truth of what happened (which we still don't know yet)?
March 19, 2009 4:09 PM | Reply | Permalink
Yes, yes. I know. I actually agree. TPM will always be golden to me as a result of that...But this isn't the US atty's scandal, or even close. I appreciate the tough reporting, really, I just think there's a tone there that's a bit too breathless and eager over the whole thing.
March 19, 2009 4:11 PM | Reply | Permalink
I have to agree with Dorn on this. This isn't the same thing as politicizing the justice dept. At worse this is a screw-up by the administration - which I am okay with as long as it is the exception not the norm and in the context of bigger accomplishments (like fixing the banking system).
March 19, 2009 4:22 PM | Reply | Permalink
Yeah, what's the big deal? We're only talking about the brazen stealing of billions of dollars. What's all the hubbub about?
March 20, 2009 1:33 AM | Reply | Permalink
All I see TPM doing here is reporting facts.
March 19, 2009 5:18 PM | Reply | Permalink
I think being a standup guy on this can actually be the beginning of restoring his credibility. It's the coverup that always gets you. So I'm glad to see this.
March 19, 2009 4:02 PM | Reply | Permalink
Make it stop, TPMDC. Please. This is a sorry excuse for a post. You're telling us part of what CNN is going to broadcast later today?
Why?
March 19, 2009 4:06 PM | Reply | Permalink
I agree. Please, leave the "breaking news" to CNN.
March 19, 2009 4:17 PM | Reply | Permalink
What's the beef? Next time you'll be complaining that CNN had the story and TPMDC missed it. It's not like this isn't an important story. It's sure looks like Geithner has mishandled this. Why should TPM not be reporting it?
March 19, 2009 4:23 PM | Reply | Permalink
I don't object to TPMDc posting this information per se. I object to this very short post in particular because it's basically a pre-replay of something CNN is producing, and belongs more appropriately in a longer post about, I dunno, the minute-to-minute developments of Geithner's role in the AIG bonuses.
March 19, 2009 4:35 PM | Reply | Permalink
I agree. The CNN "Breaking News" doesn't even match the facts. Did anyone bother reading the transcript? Where exactly does it say that he,
"Confirms Treasury Asked Dodd For Bonuses Loophole"?
March 19, 2009 8:14 PM | Reply | Permalink
Its amazing how Obama has been able to distance himself from Timmy, for that matter, most of his appointments.
While enjoys approvals in high 60s, Giethner I don't think can get any lower, if polled.
I'm actually beginning to feel sorry for this fellow.
March 19, 2009 4:07 PM | Reply | Permalink
distance himself?
approvals in the high 60s??
where have you been and what are you reading.
obama is going to take the hit for this.
next approvals in the high 40s...2 weeks from now 45.
March 19, 2009 4:18 PM | Reply | Permalink
Today's Gallup
For those who are click impaired, it's 62-27. This is a full three days after the news of the bonus bullshit.
March 19, 2009 4:25 PM | Reply | Permalink
Yeah, we know. And Obama won't win a single primary or caucus either . . . YAWN
March 19, 2009 4:27 PM | Reply | Permalink
Thanks for making me laugh out loud. Seriously, iy did. That was the most absurd comment I've read here in a long, long time. Here is a clue: Obama's negatives/disapproval ratings are only being driven by Republicans...gee, what a surprise...whose policies we know for a fact have failed miserably. Obama's approval ratings are solidly in the 60s (sorry, Republican Rasmussen is not relevant here as his polls are far outliers). Obama's townhalls yesterday and today will only help as well. "Obama will be in the 40s"....LOL!!!! Of course we all know you will not post back to "correct" yourself when proven wrong.
March 19, 2009 5:17 PM | Reply | Permalink
Well, this really isn't good for geithner and evidences a problem concerning having a wallstreet insider running this ship. I am tired of this bs line that they were worried about freaking lawsuits. That's just horsesh*t.
Who was worried aig? Aig has been sued a billion times. They live for getting sued. That's what they do in order to prevent paying out big bucks. Their line is sue me before they pay any substantial claim. It's the cost of doing business and their mo.
Who was worried the government? That's even more absurd. The government gets sued probably once a freaking second. The government gets sued all the freaking time and has an army of lawyers to deal with the suits. Again, if the liability is big bucks, like say a million dollar bonus, the response from the government would be sue us before they pay.
WTF. They were worried about lawsuits??????? That just sounds like garbage. Kind of like worried about wmd's. This really is not a good thing, unfortunately, and the republicans and right-wing media are fanning this flame to totally divert attention.
March 19, 2009 4:07 PM | Reply | Permalink
Something here isn't adding up. This is the kind of FUBAR you'd expect from the Bush administration. Geithner and Obama know better. How did they manage to screw this up so badly?
March 19, 2009 4:26 PM | Reply | Permalink
Yeah, I'm wondering as well. It really doesn't add up and is kind of disturbing to be frank. The getting sued bs is total bs. I am sure that was not even on the radar screen. There had to be something else going on, because it really doesn't make sense at all.
Leahey was on I think maddow last night and she raised the being sued bs and he was like WTF, without saying WTF. He said that he would love to try that type of case before a jury. He'd do it for free and so would I and probably thousands of other lawyers in the country. It's a no brainer. Like anybody breathing would give these crooks a penny? Give me a break. The counter suit for fraud and breach of fiduciary duty and give me some time and I could come up with a bunch of claims would dwarf their million dollar bonus. They would never file a suit because they would be looking at a hundred billion dollar judgment against them.
Unfortunately, something doesn't add up and this firestorm is totally distracting from what has to be done and should be being done. It's really unfortunate.
March 19, 2009 4:36 PM | Reply | Permalink
It's not just the part about getting sued, which I agree is preposterous. The Obama team has been pretty sharp, and for them to screw this up so badly is pretty uncharacteristic. True they inherited the mess, but they haven't exactly distinguished themselves in trying to clean it up or explain to the public what they're doing. If you can't explain what you're doing people will assume you don't know what you're doing.
March 19, 2009 4:43 PM | Reply | Permalink
Agreed * 2
I just don't get it. If Obama doesn't think this is a big deal, I'd disagree with him but move on. The thing I don't get is that he is acting like he is outraged, but then does nothing.
On this issue I am starting to get the Bush filter working. You know, the one where you assume reality is 180 degree opposite of what they are saying.
I like Obama, A LOT!!, but this whole business leaves me with an unsettling feeling. I just makes no sense.
March 19, 2009 4:51 PM | Reply | Permalink
Geithner either doesn't answer a question in a straightforward manner or he uses weasel words. Obama needs to find someone who can be a spokesperson for Treasury because Geithner is getting the communications job done. And maybe they're not getting the main job done either, it's hard to know. And you're right, MBF, something sounds fishy.
March 19, 2009 6:37 PM | Reply | Permalink
Geithner is *not* getting the ...
March 19, 2009 6:38 PM | Reply | Permalink
Does being president of the Federal Reserve Bank of NY count as being a Wall Street Insider?
His predecessor and successors in that post, respectively arrived there from Merrill Lynch, and Goldman Sachs.
Geithner's immediate posts prior were with the IMF and CFR. Most of his career appears to have been exclusively public sector.
Just sayin' - dude was never CEO of Goldman Sachs, fer instance.
March 19, 2009 4:33 PM | Reply | Permalink
True, but he was "friends" with all those guys as chair of the NY fed, which "oversaw" wallstreet and this meltdown. Also, he was involved in all the crap leading up to the meltdown. Something isn't adding up. It just seems strange.
March 19, 2009 4:38 PM | Reply | Permalink
So who, exactly, do you think should be in charge of Treasury during a meltdown in the financial system? Anyone capable of knowing what the frak is going on is going to have some Wall Street in his or her career.
So who is it you think should have the job? Some noble factory worker with no education but an abundance of "good old common sense"? An academic economist with no actual business experience? A professional English major?
March 19, 2009 6:11 PM | Reply | Permalink
I know an out-of-work plumber who would be dandy for the job.
March 19, 2009 6:28 PM | Reply | Permalink
Hush! If the republicans hear that they will try to do it! I'm rather surprised they haven't yet.
March 20, 2009 7:21 AM | Reply | Permalink
Have you seen or heard Elizabeth Warren speak? She's one of the TARP overseers and Leo Gottlieb Professor of Law at Harvard University, where her research areas include bankruptcy and commercial law. Just an outstanding, outstanding thinker. Knows economics inside and out as well as the whole Wall Street rhythm. And is doing a fantastic job identifying the systemic problems with TARP as well as problems within "The System" as a whole.
This rampantly-running meme that continues to get played over and over again re: the only people who can possibly understand and "unwind" this stuff are those who created the mess...being discredited minute by minute. Just a guess: Not many people are buying into it anymore.
It's a false choice to say we either have to go with the guys who created this fiasco or Joe/Josephine Blow - you know, the ones who started a dog grooming service.
Totally false.
March 19, 2009 8:10 PM | Reply | Permalink
True. But not somebody who is butthole buddies with the theives. I actually have learned more than I care to know about wall street in the last year just reading, following what's going on, and spending about a month listening to stock brokers whine, bitch, complain and explain how they game the system. I probably know enough to hire the right people, be honest and deal with the problem. That's the issue. I don't think that I am the sharpest tack, so I would hire people to explain the issues and make decisions based on the information given. I wouldn't be beholden to buds to cover their asses, which I wouldn't do anyway based on my personality. That's the problem.
March 19, 2009 10:22 PM | Reply | Permalink
Oh God, not this bat-squeeze again. This time with an added strawman bonus. Congrats.
You've already asked this once. And I already answered you.
March 20, 2009 12:49 AM | Reply | Permalink
And I'll add another possibility: Volcker. Not that it's original with me or anything.
Farmer: Gee, someone's been stealin' the chickens.
Fox: Pick me! I have inside experience and know exactly what's going on.
Farmer: OK, you're hired.
Hens: Oh, s**t.
March 20, 2009 12:50 AM | Reply | Permalink
A weasel-sentence that covers a multitude of sins. "Some Wall Street experience"?? The question -- and you it know quite well, although you're doing your rhetorical and lawyerly best to avoid it -- is what experience, with what results.
Frank Rich:
More in next comment, as TPM now apparently chokes on more than one or two links in a comment.
March 20, 2009 12:59 AM | Reply | Permalink
More documentation here.
And more reporting here.
Yep. Bring in the same band of deregulators and Wall Street acolytes who did such a bang-up job last time round. Experience you can count on!
March 20, 2009 1:01 AM | Reply | Permalink
Obama at another town hall for anyone interested on CNN
March 19, 2009 4:09 PM | Reply | Permalink
If you tune in quick you can see the Governator!
March 19, 2009 4:12 PM | Reply | Permalink
KAL-EE-FORN-EE-AH!
March 19, 2009 4:17 PM | Reply | Permalink
I think this might help him versus anything else. Yes, the republicans might get a little mad, but this scapegoating has gotten a little too much.
March 19, 2009 4:12 PM | Reply | Permalink
yawn
March 19, 2009 4:19 PM | Reply | Permalink
Nice to *see* you around.
March 19, 2009 4:30 PM | Reply | Permalink
I've been reading, but rarely posting.
Good to see you too!
March 19, 2009 6:28 PM | Reply | Permalink
What if we really do need these guys to stay on and work the problems out? Was there really any upside to Geithner's having allowed what happened other than he thought it would be a good thing for these people, who understood the deals and relationships and contracts, to stay on? I love how commenters on blogs, most of whom know absolutely nothing about this issue, have decided who the experts are and have analyzed everyone's motivations.
I think it's important to try to understand the issues, and discussion is one way to do that, but the fact-free, assumption-based pontificating is really uncalled for.
Everyone should read very carefully Nate Silver's blog post here, which actually casts some factual light on the matter, and his conclusion in a related post about the taxing of bonuses: "When historians look back on this period, this is not likely to be seen as one of our prouder moments. Moreover, I wonder if it does not augment the view that the financial crisis was perpetuated by a few bad apples, when the real causes were far more systemic, and systemic reform will be required avoid their recurrence."
March 19, 2009 4:21 PM | Reply | Permalink
Nate Silver is a statistician, not an economist, so I wouldn't put that much stock in this. Moreover, he alludes to the core problem with executive compensation with which everyone is too familiar, i.e. a "heads I win, tails I win" bias. When the company does well they take credit, and command huge sums of money. When the company does poorly, they still command huge sums of money. The core problem is that they think they're entitled to huge sums of money regardless of what happens. It's the entitlement that gets people mad.
The AIG bonuses are a direct result of that entitlement mentality. The ratio of executive compensation to that of the average worker is more than a factor of 10 higher in the US than it is elsewhere in the world. This is really what has to change.
March 19, 2009 4:39 PM | Reply | Permalink
You're missing the point and its one that would have been critical if anyone had noted it back before it had reached the point that no one was going home until there'd been a hangin.'
Back before the bubble blew, the people at AIG-FP's "compensation"was, in fact, basically just a system of performance bonuses or commissions. After the commission/bonus base went a little south, which would have meant the whole division wasn't going to get paid anything, AIG changed the compensation scheme to one where they got fixed amounts at set times contingent only on vesting. Which would basically be "salary." The problem is that, rather than just say "okay, we're putting you guys on salary," they had to go and call it "bonuses."
So basically, everyone's gotten upset over a nomenclature problem. I'm not seeing anyone boiling up pitch and ripping open pillows over the fact that AIG also continues to pay salaries to salaried employees--even highly compensated one.
March 19, 2009 5:51 PM | Reply | Permalink
And very handsome "salaries" they were, too. But it's YOU who have missed the point. They wanted to be paid on commission when things were rollicking because they made tons of money that way. But when things went south, suddenly commissions weren't such a good bargain. They wanted the same obscene amounts of money win or lose. This is the crux of the matter.
People have been outraged for years over executives getting paid obscene amounts of money while running their companies into the crapper. Now they've really pissed in the plums and they need to be bailed out with taxpayer dollars, but they're STILL demanding obscene amounts of money only now it's coming from the taxpayers.
THAT is why people are pissed. It's part of a culture that believes they're the ones responsible when a company does well, and the people actually bolting fenders on the cars don't matter.
March 19, 2009 6:36 PM | Reply | Permalink
Actually, Nate Silver received an A.B. from U of Chicago in economics, spent a year studying at the London School of Economics, and after graduation worked as an economic consultant for KPMG. While he's not a Ph.D. in econ., he certainly has a sufficient educational basis to credibly address the intersection of politics and economics.
March 19, 2009 11:03 PM | Reply | Permalink
Perhaps. And this gets me to thinking about Geithner himself. He's hardly a strong presence on TV. He wasn't an Obama insider and I'm not sure they had much of a relationship at all before he joined the administration. He may be a Dem, he may not be. He's certainly not a political ideologue. He had the stink of the 2008 bailouts all over him. And the administration knew about his tax issues before they even announced him as the nominee for the slot. We know Obama and his folks are smart. One the face of it, Timmy seems like a horrible pick. But maybe the reasons he's there is mostly because they needed a guy who had intimate knowledge of everything that went down last year, particulary the various bailouts. Kind of the same rational for keeping the AIGFP folks on board - only the architects can undo this mess.
Anyway, just a thought.
March 19, 2009 4:45 PM | Reply | Permalink
The unfortunate reality is that anyone with enough knowledge of all of this mess is going to be tainted in some way.
March 19, 2009 5:30 PM | Reply | Permalink
I'm expecting to see those Republicans who voted for this to continue to go after Geithner on this issue. The ones who voted no don't have a leg to stand on at this point.
March 19, 2009 4:26 PM | Reply | Permalink
It's good to see the treasury take responsibility for this 'loophole' rather than try to blame it on Dodd as Greenwald had been saying they were doing.
March 19, 2009 4:34 PM | Reply | Permalink
Geithner should take any hit - he's not a politician and only answers to Obama. Dodd needs to worry about getting re-elected.
Geithner had real-world concerns for the "loophole", he's not used to playing politics with optics. Do you want to get tied down in litigation over less than one tenth of one percent of TARP monies, or do you want to work to solve the much, much, much larger problem.
These AIG folks know the games, schemes and know where the bodies are buried. They're much more likely to work with you to fix the ills than cooperate while outsiders are brought in to look to point blame.
Pragmatism vs politics.
March 19, 2009 4:41 PM | Reply | Permalink
Explain that to TPM and their obsessive reduction of everything to one version or another of the bitchslap theory. It did not apply during the election, it did not apply during the stimulus debate, so perhaps it's time they should get a clue and stop applying it to everything.
March 19, 2009 5:00 PM | Reply | Permalink
Noticed that too, did you? Although it did sound like the bitchslap theory was morphing into something more like a johnson measuring contest theory.
March 19, 2009 5:37 PM | Reply | Permalink
I proclaim no expertise on this but I'd bet that even if the loophole hadn't been included, AIG would have found a way of paying out these bonuses without even having to go to court. These were retention bonuses contracted back in early-to-mid 2008. They weren't performance based and the contracts were inked well before AIG fell apart. (or well before the fact that they were falling apart became public) I don't like bonus like this at all and I despise the income gap that exists between the rich and everybody else, but I just don't see how any legislation would have prevented these bonuses from being paid out. The best way to have prevented the payout would have been to threaten to withhold additional bailout funds from the government if the bonuses were paid out - but then you'd be putting the entire economy at risk to satisfy a populist urge to get the fat cats, all over less than $200M. Geithner was in a tough spot. The best way to have handled this was to have explained the loophole prior to or soon after the passage of the stimulus bill. By doing that, they administration could have controlled the message. And if it had been delivered by Obama, even better.
March 19, 2009 4:54 PM | Reply | Permalink
I hope TPM will send out some kind of notice when they've decided the world doesn't revolve around AIG.
God, get a grip or some perspective. This is not the be all, end all. geez.
March 19, 2009 5:17 PM | Reply | Permalink
Is Geithner going to explain why he pushed for this change in the bill?
March 19, 2009 5:33 PM | Reply | Permalink
He did. Given that the bill would put the bailed out companies (not just AIG) etc in legal jeopardy (i.e damned if you do, damned if you don't) that it could be successfully challenged in court. They preferred instead to go for a more legally sound method of recouping the $.
March 19, 2009 5:56 PM | Reply | Permalink
Not to mention, if the provision weren't upheld in court, the entire stimulus bill would have been nullified. With that much at stake, it simply wasn't worth the risk of having a provision that would have repealed bonuses for employees who already fulfilled their contractual obligation to receive those bonuses (i.e., sell a certain number of life insurance policies).
March 19, 2009 6:37 PM | Reply | Permalink
Not to mention, if the provision weren't upheld in court, the entire stimulus bill would have been nullified
Why do you conclude this? Courts regularly strike down targeted provisions of federal laws.
March 19, 2009 7:04 PM | Reply | Permalink
WTF is up with that headline on the front page - "Who's in Charge Here?"
Soon we'll be seeing "developing hard...." everywhere on TPM
What has happened to this site?
I guess, to paraphrase what is said about Mark Halperin, Drudge rules TPM's world.
March 19, 2009 5:38 PM | Reply | Permalink
I agree. While I respect and applaud (loudly) TMP's Muckraking, not everything deserves the same scrutiny and uproar and not everything deserves an 'OMG' headline. It dilutes TPM's seriousness and standing. When TPM makes a Muckraking headline, it should be serious news and lately, sadly it hasn't been.
In TPMs defense, I am noticiing this on a lot of other sites too (HuffPo= Tabloid journalism lately).
I think people are determined not to make the same mistakes they made with the Bush admin - which is a good thing but there should be a difference between accountability and mountains/molehills/witchhunts.
March 19, 2009 6:03 PM | Reply | Permalink
Yeah, funny how Republican presidents always seem to reap the benefit of the mistakes the press made in their treament Democratic presidents, and Democratic presidents always seem to reap the whirlwind because of the mistakes they made with Republican presidents.
March 19, 2009 8:42 PM | Reply | Permalink
oooh that headline really infuriated me?
March 19, 2009 6:55 PM | Reply | Permalink
I sense two very different definitions operating here when it comes to caring about, or addressing "The Bigger Picture."
For those who are upset about TPM's "obsessive" reporting on all things AIG, admonishing Josh and company to focus on "The Bigger Picture" as relates to economic recovery for our nation...
...I do understand where you're coming from.
May I offer an alternate perspective?
For me, this isn't about "economic recovery." In my book, THAT'S the smaller picture. Instead, I see "The Bigger Picture" is much more about revamping our ENTIRE way of doing things when it comes to money: how it's distributed, saved, created, etc.
The moment we're now in has been "done" probably a hundred times before throughout history. Guys on the top holding the big bucks, clinging to it for all it's worth, and doing everything possible to manipulate - most times sans even an ounce of honesty or decency - the powerful forces that determine who gets to buy the house on the hill, and who doesn't.
Again, old stuff. And unfortunately, we as a species have yet to address this unending Groundhog's Day loop as we focus on "saving the economy" or "growing jobs" or "lowering taxes" rather than addressing the very rotting core of the whole system.
This focus on AIG is merely reflecting...in an important way...that very rotting core. Including the incestuous relationships among the Federal Reserve dudes, the US Treasury dudes,the Wall Street dudes, the political dudes.
If this doesn't get addressed - this underlying corrupt way of "doing business" - frankly, I could care less if the economy recovers.
Because it'll still be just another band aid. Again. And I can guarantee...
...a few years later, the same thing, the very same thing will happen all over again. Different form perhaps, but the same thing.
Regards.
March 19, 2009 6:16 PM | Reply | Permalink
Hear, hear.
March 19, 2009 6:39 PM | Reply | Permalink
I don't have a problem with the obsessive reporting - all media does that when some new scandal comes out. My issue is the exaggerated headlines and the reporter injecting too much of their opinion in an article that is supposed to be objective. Leave the opinions to the readers or write a separate blog. As for the headlines - I see newspapers that do this in order to get readers to buy their paper instead of their competitor's own, TPM doesn't need to do that.
March 19, 2009 7:08 PM | Reply | Permalink
Excellent points - the greed that lead to this really is the big picture. However, I disagree that the bonuses are the relevant issue. A) If I thought this was the only way to get the $ back that would be one thing but it strikes me as wielding a chain-saw when what is needed is a scalpel. I think suing those people who wrote the contracts and the people who made leverage decisions for AIG are the criminals - and they are criminals, not necessarily joe-shmoe sales guy.
I say this as someone who is (well was, before I joined the other 5mil unemployed) incented on a bonus schedule. If my boss tells me I make money by selling widgets, I sell widgets. I would have nothing to do with how they make the widgets or in AIG's case it is unlikely that the people selling the swaps were aware of the leveraging situation. However, most companies tie bonus compensation to overall company profits so if the company is broke, you get bupkus.
Now that said, even if I had a sweetheart deal like AIG - if I found out the widgets were made of lead paint and dangerous, I might think twice about profiting from that and would certainly think twice about working for the widget company.
On the other hand, if the company then asked me to stay on to help fix the widgets that were already sold, I would probably consider that but I would want some sort of income guarantee because otherwise I could make more money elsewhere at a healthy company.
At AIG, the problem is with the people making the leveraging decisions - some of which are undoubtedly part of the this bonus mess. However not all.
March 19, 2009 7:34 PM | Reply | Permalink
Just to clarify, I am not saying anyone at AIG should get to keep their bonuses but I just think there are better ways to do this and don't think Obama/Geithner should get crucified for this mistake.
March 19, 2009 7:40 PM | Reply | Permalink
I also agree re: bonuses aren't the main event. As I stated, it's the corruption, the stinking, oozing corruption that has absolutely saturated the whole environment around Wall Street, the Federal Reserve, and Washington D.C. that's the real issue here.
The bonus thing: merely a symbol. But one that is acting as a lightening rod for the masses...as they/we begin to really see (with help from all of these incredible websites like TPM) what that Bigger Picture truly is.
I think it's called: waking up.
As for me: I don't want to crucify anyone. I wish Geithner well. And I voted for Obama.
But I didn't vote for same old, same old. And with Geithner's ties to the Fed of New York at the time of the first bailout - a bailout decided by the Federal Reserve, not Congress, btw - and now knowing how he fought against stricter regulations of the exec bonus thing...and all the other little details that continue to slowly leak out...uhh, no thanks. It "feels"...well disingenuous at best. And totally fake. Like we're supposed to not notice how deep his fingers are in the pie. (And Bernanke's as well.)
As for Obama: I'm saddened he's acting like George Bush in this instance: blind loyalty to someone who a.) has failed to even acknowledge the rampant corruption, and b.) seems more determined than ever to keep the "Game" going.
I don't know what's going on with our president. Can't imagine why he's going down this road. And am definitely unsupportive.
I do wish him - and you - well.
Thanks for your response.
March 19, 2009 7:59 PM | Reply | Permalink
Could the misreporting of this issue (and the comment threads that follow) get any dumber?
There was not a "bonus loophole" added to the stimulus bill. Treasury asked for a change in the Dodd amemendment to make it effective on the date the bill passed!
That's not even remotely unusual. Legislation of all sorts contain provisions to make them effective on (or soon after) the bill is passed.
There is absolutley nothing that indicates the date was added here to benefit AIG or any other company.
March 19, 2009 6:35 PM | Reply | Permalink
I think this is the "loophole" part, Quaker (courtesy the New York Times, February 9, 2009):
"The Obama administration’s new plan to bail out the nation’s banks was fashioned after a spirited internal debate that pitted the Treasury secretary, Timothy F. Geithner, against some of the president’s top political hands, including
David Axelrod, who wanted to take a tougher line on executive pay.
In the end, Mr. Geithner largely prevailed in opposing tougher conditions on financial institutions...
Mr. Geithner, who will announce the broad outlines of the plan on Tuesday, successfully fought against more severe limits on executive pay for companies receiving government aid."
March 19, 2009 7:43 PM | Reply | Permalink
As a daily sideline watcher, I am beginning to see a definite group of posters. Well off financial/political types who self identify with Geithner, AIGFP bonus babies, CNBC sympathizers and don't like their life positions questioned.
If I read Josh correctly, all this arguing is simply a prelude to later investigations and likely indictments.
March 19, 2009 7:36 PM | Reply | Permalink
Elana got played...
http://www.dailykos.com/story/2009/3/19/710701/-CNNs-reporting-vs.-CNNs-transcript
March 19, 2009 8:06 PM | Reply | Permalink
Sad, really. Elana apparently believed that CNN summarized and reported Tim Geithner's words accurately.
It's utterly absurd that we must now do this, but I think we need to promise to ourselves to follow a basic rule whenever dealing with the MSM:
RTAFW (Read The Actual Words)
March 19, 2009 11:21 PM | Reply | Permalink
"Geithner Confirms Treasury Asked Dodd For Bonuses Loophole"
Really? Where exactly in the transcript does it say that?
Here's what I read:
VELSHI: But inadvertently might somebody at Treasury have told Senator Dodd to do something that has now resulted in these payments not being able to ...
GEITHNER: No, again, what we did is just express concern about the vulnerability of a specific part of this provision, the legal challenge, as you would expect us to do, that's part of the legislative process,
March 19, 2009 8:07 PM | Reply | Permalink
Again, I repeat, courtesy the NYTimes of Feb. 9:
"The Obama administration’s new plan to bail out the nation’s banks was fashioned after a spirited internal debate that pitted the Treasury secretary, Timothy F. Geithner, against some of the president’s top political hands, including
David Axelrod, who wanted to take a tougher line on executive pay.
In the end, Mr. Geithner largely prevailed in opposing tougher conditions on financial institutions...
Mr. Geithner, who will announce the broad outlines of the plan on Tuesday, successfully fought against more severe limits on executive pay for companies receiving government aid."
With all due respect: The current Geithner response... that his only reason for fighting limits proposed by [by Dodd, Snowe, Wymen] was due to potential legal issues that could result...never got reported. Not a peep...not a glimmer...not even a hiccup...
...until now.
Hmm.
March 19, 2009 8:26 PM | Reply | Permalink
OK, we get it. You hate Geithner. He's part of the problem.
March 20, 2009 2:18 AM | Reply | Permalink
I do not "hate" Geithner. Negative energy that brings nothing of value to the situation. I actually wish him well.
That does not, however, mean I believe he's part of the solution.
Regards.
March 21, 2009 2:59 PM | Reply | Permalink
MORE TROUBLE FOR GEITHNER
GEITHNER & RANGEL TO BE SUBPOENAED IN TAX FRAUD CASE
Federal Case Alleges Political Elite Get Favorable Tax Treatment Over Ordinary Citizens
On 5 March 2009 a Motion was filed in U.S. v. David Jacquot, Case # CR 08-1171, in the Federal District Court, in San Diego, California seeking to dismiss a false tax return indictment on the grounds that the Defendant was not treated in the same manner as politically prominent individuals. A hearing on this matter is set for 30 March 2009 in San Diego and the Defendant in this case intends to subpoena Secretary of the Treasury Timothy Geithner, House Ways and Means Chairman Charles Rangel, former Senate Majority Leader Tom Daschle, and others.
The Defendant in this case is David Jacquot, an attorney and retired Army Officer. He is a decorated disabled Desert Storm veteran living in rural Idaho with his family.
This “Geithner Motion” cites HR 735 titled the “Rangel Rule Act of 2009,” which if enacted, would eliminate penalties and interest for common citizens to allow them to be treated in the same manner as House Ways and Means Chairman Representative Charles Rangel. The Geithner Motion also quotes President Obama stressing the need to “treat common citizens in the same manner as politically prominent individuals in regards to tax matters”.
The Geithner Motion details how Mr. Jacquot was vindictively indicted in retaliation for his successful defense of his clients against the IRS. The tax returns of his corporate law firm for the four (4) years of 2001 to 2004 were investigated and the government alleges that the law firm declared almost $200,000 TOO MUCH income during this time period. The Geithner Motion contains descriptions of numerous actions by the government and Assistant U.S. Attorney (AUSA) Faith Devine that are the basis for the claim of retaliation against Mr. Jacquot for his zealous representation of his client’s Constitutional and statutory rights. The improper actions of AUSA Devine have been reported to the DOJ Office of Professional Responsibility for disciplinary action and are currently under review.
A copy of the Geithner Motion and the complaint against AUSA Faith Devine can be downloaded at:
www.jacquotlaw.com/vindictive-prosecution.html
March 19, 2009 8:07 PM | Reply | Permalink
Geithner has lipstick on his shirt and he's just told his wife that the waitress at McDonad's kissed him for the big tip he left her.
March 19, 2009 8:57 PM | Reply | Permalink
Isn't it the Republicans that have been saying that you can't have the government managing these private companies? Weren't they the party that was against any restrictions on compensation?
March 19, 2009 9:36 PM | Reply | Permalink
Those complaining that TPM is focusing too much on AIG are missing the point. AIG is but one notable example of a continuing policy of shoveling money into the pockets of financiers, a policy that emanated from the Bush administration but which is now being executed by the Obama administration. By digging into AIG, I hope we can get to the reason for the continued sell out of the American people. Is Geithner off the reservation, or is there another cause for the tone-deaf response by the Administration on AIG as well as the overall favortism they've shown toward the titans of finance? From the looks of it, it seems clear both Geithner and Summers need to go, and pronto, before they can do any more damage to the country and the new presidency.
March 19, 2009 10:53 PM | Reply | Permalink
This is just too damn ridiculous. It is not like these people at AIG or Citi or any other Wall Street firm just suddenly started getting bonuses last fall. It is the way the financial industry -- shit, it's the way business -- has worked for years.
You all act like this some big revelation. Damn, we're lucky they didn't use the whole damn tranche for bonuses, and golden parachutes and office remodels. And pardon my cynicism, but there was probably already a loophole big enough to drive a truck through without making any amendments to bill. It was a giant ass loophole that allowed AIG to fail to capitalize their tasty little credit default swap in the first place.
Count me in the 12% of people with bigger, more urgent things to worry about.
March 19, 2009 11:45 PM | Reply | Permalink
+1
And yeah, while the reporting may be accurate, the last week of headlines for this site had me thinking I'd been redirected to some freeper site. You (not you Jade, the rhetorical you) don't think these headlines (forget whatever's underneath, just the damn headlines) doesn't help to drive the nutters' "I told you so, he's not ready" narrative? Think again. Yeah, driving Obama's numbers down this early will be sure to get you healthcare reform this session.
March 20, 2009 2:17 AM | Reply | Permalink
"Who's in Charge Here?"
I would ask TPM the same question.
March 20, 2009 8:18 AM | Reply | Permalink
The bonus thing, as disturbing as it is, really is small potatoes. We need to keep our eye on the ball, in this case the wholesale theft of whatever was left of America's wealth over the past decade by a cabal much larger and more powerful than these penny-ante bonus-getters. If we are all honest, this really is a distraction. No, it's not right, but it's not that important.
EYE. ON. BALL.
March 20, 2009 9:50 AM | Reply | Permalink
So, given that the transcript tells a different story than CNN's advance billing, why does this story still have the erroneous headline on TPM?
March 20, 2009 6:41 PM | Reply | Permalink