In one of the more telling moments of the AIG bonus scandal yesterday, Sen. Chris Dodd (D-Conn.) was forced to take responsibility for language in the amendment bearing his name which he adamantly denied writing just the day before.
Neatly summarizing the hammering Dodd and President Obama had taken all day, Sen. Chuck Grassley (R-Iowa) described the Republicans’ role in the mess. He said, “Being named a conferee to the conference committee for the American Recovery and Reinvestment Act meant you were invited to the final, formal meeting late on February 11, where the conference report was announced after it was finalized. This meeting was a photo op that took place hours after Majority Leader Reid announced that the Democrats had reached a deal. Every Republican on the conference committee was left out of the negotiations and consultations entirely. The fact is that the bill the President signed, which protected the AIG bonuses and others, was written behind closed doors by Democratic leaders of the House and Senate. There was no transparency, so the only way the public will ever know who added the language to protect bailout company bonuses is if someone from the small group of Democrats in the room says so.”
By the early evening, it was apparent Dodd had been thrown under the Obama bus when Fox News and CNN reported Dodd had made statements taking responsibility for adding the AIG bonus loophole into the stimulus package - at the request of the Treasury Department - that permitted AIG to pay the executive bonuses.
“It happened at staff level,” Dodd said in the report of Treasury Department participation in the legislation. “I don’t know their names.”
I’m sure his staff knows.
Republicans Turn Up the Heat on Obama
Republicans in the House and Senate yesterday turned up the heat on the Obama administration for its gross mishandling of taxpayer funds in all phases of the AIG bailout. The Obama and Bush administrations’ insistence that AIG was “too big to fail” has now cost U.S. taxpayers $170 billion. Political hysteria over $165 million in bonuses is merely a cover-up for the mess Congress - especially Sen. Dodd - made of the bailout of AIG and in the “stimulus” bill by allowing the sky-high bonuses to be paid.
Treasury Secretary and serial tax evader Timothy Geithner was the architect of the AIG bailout deal while he was evading payment of income taxes as head of the Federal Reserve in New York but before he became the Obama’s Treasury Secretary. Despite Obama’s protestations that no one at the White House “wrote the [bonus] contracts” for AIG, this is yet another example of legalistic parsing by Obama as he and his administration scramble for cover from the fallout of this scandal.
Last fall, the Bush administration and Congress stampeded each other into bailing out AIG and many other financial institutions. But when they did it, they didn’t provide the most basic controls on how the money would be used.
Later, executive pay limitations were established only to be lifted specially for AIG and others by Dodd in the “stimulus” legislation.
At the House Finance sub-committee hearing yesterday set up by Democrat leadership in an attempt to deflect anger away from their specific authorization of the payment of the bonuses in their “stimulus” bill, AIG CEO Edward Liddy was the focus of our Congress at its demagogic worst. Liddy worked for Allstate Insurance, not AIG. He came out of retirement at the behest of the government, is taking $1 a year in salary, and was not a participant with Geithner in structuring the AIG bailout deal.
Rep. Jeb Hensarling (R-Texas) spoke with HUMAN EVENTS in the hallway outside of the hearing yesterday that was jam-packed with media.
“The $165 million in bonuses is merely the TARP outrage of the week, and it’s only Wednesday,” Hensarling said. “That outrage pales in comparison to the outrage of the $170 billion plus dollars of taxpayer exposure to prop up a failed company. It pales in comparison to the outrage that we should have for taxpayer money that is being used to essentially make counter-parties whole, many of whom are foreign financial entities, and it pales in the outrage we should have that there is no plan that is presented to the American people or to Congress that makes the case that AIG is sustainable and can be returned to profitability. And it pales in comparison to the outrage we should have that the Democratic Congress and President Obama could have stopped this. They had the power, they had the ability, they had the knowledge to stop this and they didn’t. And now they’re trying to come up with fig leaves to try to protect themselves. The question has to be asked what did the Obama administration know and when did they know it?”
HUMAN EVENTS broke the story yesterday of the demand sent in a letter from Sens. David Vitter, Jim DeMint and Jim Bunning to Senate Banking Committee chairman Chris Dodd (D-Conn.) and ranking member Richard Shelby (R-Ala.) that they formally subpoena the relevant AIG contracts as well as any other documents related to bonus and compensation materials. These senators all serve on the Banking Committee. The rules of the Senate Banking Committee require only that the chairman seek the agreement, approval, concurrence, or consent of the ranking member before issuing a subpoena, or the chairman also may gain approval for a subpoena from a majority of the committee. The obvious and glaring potential stumbling block to accountability in the Senate is that the committee’s chair, Sen. Dodd, was the author of the very amendment dropped into the massive Obama “stimulus” bill authorizing the actual AIG bonuses in question. Dodd was also the single recipient of over $100,000 in campaign cash in 2008 from AIG.
By midday, Rep. Steven LaTourette (R-Ohio) and the House Republican Study Committee (RSC) had produced its own mechanism to enforce accountability, a resolution of inquiry into the AIG negotiations. With the imprimatur of House Republican leader John Boehner (Ohio), whip Eric Cantor (Va.) and conference chair Mike Pence (Ind.) and dozens of co-signers, H.Res 251, known as a resolution of inquiry, would force Geithner to provide all documents, records and communications regarding AIG within 14 days of the bill’s adoption. Specifically, it demands the following information:
- negotiation(s) concerning the controlled break-up of AIG into at least three government-controlled divisions;
- negotiation(s) concerning the need for an additional $30 billion from the Troubled Asset Relief Program (TARP) funds [PL 110-343, Section 2];
- government communications and authorizations for payment of pre-existing bonus contracts with AIG executives.
I caught up with RSC chair Thaddeus McCotter at the AIG hearing yesterday and we spoke about this resolution.
“The one thing the American people want to know more than anything else is how we got in this mess,” McCotter said. “The bonuses were the symbol that really set off the American people at the underlying leveraged bailout of by their treasury of these financial institutions that were quote too big to fail and went ahead and did it anyway. … The American people need and deserve an answer from these companies, these financial institutions that they bailed out, because what we’re experiencing now is not merely a crisis of confidence by consumers. America’s had a crisis of confidence in financial institutions and in governmental institutions and until those are restored in an equitable, sane and sound fashion, then there will be no confidence in the economy and the recession will continue. The longer this dysfunction is perpetuated, the more this recession will continue and the more Americans will be harmed by the actions of these bad actors.”
