Pelosi: One Way or Another, AIG's Bonuses Are Coming Back
House Speaker Nancy Pelosi (D-CA), after issuing a statement on Sunday vowing that Congress would examine ways to claw back AIG's $450 million-plus in questionable bonus payments, isn't letting go of the issue.
In a second statement released this afternoon, Pelosi urged the Treasury Department to do "use whatever tools at its disposal" -- legal or otherwise -- to reclaim the bonuses. And she reminded the rest of official Washington that Congress is already on the case.
The American people do not want their tax dollars spent on bonuses for AIG executives who have mismanaged their company into near bankruptcy. AIG executives should voluntarily forgo their excessive retention payments, but if they refuse, the U.S. Treasury should use whatever tools at its disposal to make AIG repay taxpayers.AIG has turned on its head the basic principle that bonuses and retention payments are rewards for outstanding performance. No taxpayer funds should be used to pay bonuses or other unjustified compensation to AIG executives whose irresponsible risk-taking brought our financial system to the brink of collapse.
This week, Congress will demand further answers from AIG on the steps the government-controlled company will take to repay taxpayers. Congress and the Obama Administration are working to protect taxpayers from such irresponsible misuse of taxpayer funds.
After the jump, you can read more congressional reaction to today's unfolding AIG flap.
House Minority Leader John Boehner (R-OH) asserted that his party has been pressing for an "exit strategy" from the bailout for months now:
For months, Republicans have repeatedly asked both the Bush and Obama administrations a very important question: what is the government's exit strategy from this sweeping involvement in private business? We have done so because taxpayers are not receiving an adequate accounting from either the Treasury or the management of the companies that received taxpayer funds. Unfortunately, we have not yet seen such a plan. The latest revelation about AIG executives receiving millions in bonuses while taxpayers continue to bail out the company with hundreds of billions of dollars is outrageous and the clearest example yet of why an exit strategy is essential. The Administration should pursue all means of recovering these bonus payments and present Congress - and, more importantly, taxpayers - an exit plan as soon as possible.
Senate Majority Leader Harry Reid (D-NV) expressed confidence in the Obama administration's efforts to get the bonus money back:
This weekend we learned that AIG doled out $165 million in bonuses to senior executives - bonuses paid for with taxpayer-funded bailout dollars. With millions of Americans out of work, staying up nights trying to figure out how to make this week's paycheck last until the next, wondering how they'll make the next mortgage payment or pay the overdue tuition bill, these executive bonuses are beyond outrageous.President Obama has instructed Secretary Geithner to pursue every legal avenue to address this grievous abuse of taxpayer money, and I applaud that effort.
Our financial sector will never heal unless the financial companies who helped create this economic crisis begin to regain the public trust. The actions of AIG do just the opposite, and every American is justified in their outrage at this breach of public trust.
And Sen. Russ Feingold (D-WI) echoed Reid's sentiment:
President Obama is doing the right thing by pursuing all legal options to cancel these bonuses. At a time when millions of Americans are losing their jobs and trying to make ends meet, it is outrageous that a company that has been bailed out by the taxpayers for its mistakes would turn around and pay its executives such a staggering sum of money.Since some of the recipients of these bonuses may have been responsible for the practices that drove the company to the brink of collapse - jeopardizing the financial system - I am sure many Americans will question whether they are indeed "the best and the brightest" and whether they deserve this level of taxpayer-subsidized compensation.
















I hope they hold on to this confrontational position longer than they did with Roland Burris...
I also hope that this means the next time Congress passes any bailout money, they include the kind of strong restrictions on executive compensation and behavior that should have been in the first bailout. Come to think of it, is it too late for Congress to go back to the original bailout and add additional conditions to accepting the existing bailout money?
March 16, 2009 6:18 PM | Reply | Permalink
Well, I really like pelosi, but "near bankruptcy"? Hello, they are at a place that is beyond bankruptcy. You don't get the government to pump 170 billion into a bankrupt company that is worth zero. The company is 170 billion below bankruptcy and in the deepest hole imaginable. I'm trying to think of the appropriate phrase, but "near bankruptcy" sure isn't it. I really can't believe the conduct of aig. It is not kafkaesque.
March 16, 2009 6:53 PM | Reply | Permalink
How about a new tax rule: 100% tax on non-salary income from companies getting assistance from the federal government. Hey, how about 200%?
March 16, 2009 7:03 PM | Reply | Permalink
I love it:
100% taxation for all bonuses for ALL employees of companies receiving TARP funds.
The IRS can make whatever tax laws it wishes. Contract or no contract. And these assholes can GO TO JAIL if they try to evade taxes.
March 16, 2009 8:58 PM | Reply | Permalink
What do you have against janitors and receptionists?
Or are you under the impression that every single employee of those companies makes six figures or higher?
If it's just hyperbole, that's one thing, but that broad a statement echoes the indiscriminate vengeful sentiment of a mob.
March 17, 2009 8:35 AM | Reply | Permalink
What, we're going to tax the bonuses to get back tax money we've already given them? That's ludicrous.
The bonuses are about 3% of AIG's total payroll (salary + bonuses). All they have to do is give everyone a 3% salary increase and they accomplish the same thing. Then they can say with a straight face "There won't be any bonuses this year"
I say, take back all of the money we've given them and let them fail. They obviously just see the bailout funds as manna from heaven. Let's see what they do when the feed trough is taken away.
March 16, 2009 7:21 PM | Reply | Permalink
I'm left wondering why this clawback is only being applied to AIG.
March 16, 2009 7:51 PM | Reply | Permalink
Since we own about 80% of this POS, why don't WE determine salaries? These a--holes should get paid minimum wage. If these a--holes don't think that is good enough, there are plenty of out of work financial experts (think Bear Stearns, Lehman Bros....) who would be happy for anything that is not flipping burgers.
March 16, 2009 9:29 PM | Reply | Permalink
Furthermore, from the WSJ:
"...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..."
Wait a minute. Just....wait a minute.
We're going to GIVE THEM ANOTHER $30 BILLION?!?!?!
So, what, they give us back the $500 million in bonuses and then we give them $30 billion more? Why not just give them $29.5 billion and call it even?
How idiotic is this situation going to get?
March 16, 2009 7:26 PM | Reply | Permalink
We were already about to hand them another $30M, only now we're keeping it until they quit handing out bonuses.
March 16, 2009 9:29 PM | Reply | Permalink
Did Pelosi say that? If so, what exactly did she say?
If not, it's a hell of a thing for you to impute that the Speaker of the House of Representatives has urged the Treasury Department to act illegally.
March 16, 2009 8:10 PM | Reply | Permalink
I didn't take Elana's statement as suggesting illegal action after I gave it some thought. While I thought the wording was easily construed in such a way, I think what was meant was actions other than taking them to court (such as withholding future infusions of cash, which is legal in that it is lawful but not something that involves cops or judges or lawyers).
March 17, 2009 2:03 AM | Reply | Permalink
This is a side issue. There are tons of actions the gov can take against aig. The real issue is the stimulus package, another wasteful blend of Kenyesianism: tax cuts, pork, and deficit spending. It won't fix anything.
We need Clinton economic policy to get us out of this mess: fiscal restaint, strategic investment, modest tax hikes to pay down the debt but leave capital for investment, tax cuts targetted to support American industry, competent financial management, and a modest return on the bailouts.
None of that is complicated. And running the government with a reasonable profit margin would be a piece of cake for educated managers. But powerful forces would make a killing from the meltdown, and the stimulus package shows they're still firmly in control. To pass anything serious, Obama and the congress will need massive support from the public. Yes Virginia. We're at the mercy of the slobbering masses. And time is running out. They'll need to support neo liberal policy in the voting booth, opinion polls, and through NGOs. Until they do, the economy will continue in free fall.
Please see Stimulus Redux on my site. http://a-civilife.blogspot.com
Hat Tips! Thanks!
03-16-2009 12:26 PM
March 16, 2009 8:37 PM | Reply | Permalink
You have no idea what you're talking about.
There's no “blend” of Keynsianism there: tax cuts don't do jack. Those were there to mollify Republicans (fat lot of good that did) and make good on a campaign promise. Keynes said we just need to spend like crazy to get out of a recession, and wuddyaknow? He was right.
And a balanced budget right now is the last thing we need. There's only one entity in America that is able to borrow and spend arbitrary amounts of money right now, and that's the federal government. And what the economy needs is someone to spend money, and lots of it. If Chicago upgrades its bus fleet, Minnesotans who make buses keep their jobs, as do the people who make and ship parts for buses; then all those people stay in their homes. If the government quits spending money, then no-one is spending money, and the GDP goes into free-fall. Et voilà: the Hoover presidency. There's a reason they called them Hoovervilles.
March 16, 2009 9:28 PM | Reply | Permalink
The American people do not want their tax dollars spent on bonuses for AIG executives who have mismanaged their company into near bankruptcy.
No the "American people" would much rather their "tax dollars" be spent on the expansion of empire instead.
And no-bid cost-plus contracts at the DoD and DoS.
March 16, 2009 9:10 PM | Reply | Permalink
Maybe we can kill two birds with one stone here: the counry desperately needs an end to the constant gaming of the system for the personal profit of the perpetrat...er, participants, and it apparently also needs an object lesson in why an "imperial" presidency endowed with vast powers to make up and/or ignore the legalities of due process is a bad thing (yeah, GOP, I'm lookin' at you!)
So, the president would declare a national security emergency under the USAPATRIOT Act, which supercedes the provisions of contract law and the various legal rights of all parties to the financial terrorism which is being brazenly conducted to loot the national treasury (robbery still being as much of a crime as murder, as I recall); all the assets of the parties/companies involved are then seized by the State, and the Terror Masterminds of the Universe are taken into custody, whereupon their future liberty and physical security can only be guaranteed if they cooperate fully with all actions required by the President and his duly elected/appointed reps.
Otherwise, Guantanamo and Baghram AFB, as well as other "black sites" worldwide, although pending closure, may get a new lease on life with an infusuion of new class of inmates. And then the same offer is made to the next tier of lawful enemy financiers below them.
But... but... surely President Obama, good liberal that he is, would never stoop to such a low level as to treat the legal system in the same way that Bush/Cheney did! Why, that would be just unthinkable, wouldn't it?!
So...are you feelin' lucky today, Punks? Are you?
- AManOfConstantZorro
March 16, 2009 11:10 PM | Reply | Permalink