AIG & Me: A Wacky Day on the Hill
If I were inclined to believe Timothy Geithner didn’t know about the AIG bonuses until last Tuesday—as the administration claims—that went out the window when I went to the AIG hearing on the Hill today and listened to Paul Kanjorski declare that he had known about them at least four to six weeks ago. As he said on CNBC today:
I’m sick and tired of hearing the administration and the Secretary of the Treasury say "we just found out about it." That’s not true. And if he did just find out about it on Thursday or Wednesday then he better get to his mail department and to his telephone people because we communicated with the Treasury at least six or seven times.
Liddy also said that the Fed, and specifically Ben Bernanke, knew that the bonuses were going to be paid and approved them.
My Dodd story from yesterday continued to snowball. Robert Gibbs tried to stick it to Dodd four—count ’em—four times in yesterday’s presser, referring to "the Dodd provisions," the "Dodd amendment," "the Dodd legislation" and "the Dodd compensation requirements." Today, Dodd pushed back on CNN:
BLITZER: The mysterious loophole inserted at the last minute that allowed these bonuses to go forward. What I hear you saying is that you personally, you did this in order, at the request of the officials at the treasury department, Timothy Geithner among others.
DODD: Just say this. I wouldn’t have modified my own amendment. I spent a long time trying to get people to change it. The alternative was losing the amendment and I didn’t think we should do that.
BLITZER: Who asked you at the Treasury Department to do it?
DODD: I don’t know their names specifically, but staff-level people.
So, thanks ever so much Robert Gibbs, eat me — Love, Chris.
Arianna then started asking questions about how the Wyden/Snowe provision that would cap bonuses at $100,000 for TARP recipients was cut from the stimulus bill during conference. Nobody’s talking.
I was on my way out of the Rayburn office building today when I happened to pass Henry Waxman, who was one of the conferees.
"Congressman Waxman!" I said. "Jane Hamsher, Firedoglake. Big fan. Listen, I understand you were one of the conferees on the stimulus bill…"
"Yes, I was" he said.
"Everybody seems to be wondering how the compensation limits got cut — can you tell me how that happened?"
"Yes, they did."
"I didn’t know that. Well, I’ll have to look into that."
OK, well, Henry must live in a cave.
I later interviewed Senator Merkeley, who I really, really like. He’s a true progressive whose commitment to fighting the banks on cramdown is one of the bright lights on the Hill right now. I asked him if he’d been made aware, as a member of the Senate Banking Committee, about the impending AIG bonus payments — as Rep. Kanjorski had. He says he hadn’t.
I then wanted to know how they planned to address the problem going forward — namely that there are still about a billion dollars worth of AIG retention bonuses still to be paid this year. He said that from discussions he’s had in the halls, in the caucus, in committees, three options are being considered:
1) A legal strategy about the contracts — his understanding is that breaking them would be tough, "it ties us up in court forever" he said.
2) Telling AIG to get together with their employees, tell them that it’s wrong to take the money and encourage them to voluntarily break the contracts. "Tell them they’ve got to change their culture."
3) If they don’t get rid of the contracts voluntarily, "we grab it back through tax revisions."
I pointed out that the Financial Products Division was headquartered in London, and many of the employees might not be subject to US taxation. He said he wasn’t aware of that.
As far as I can tell, although everyone on the Hill is pointing fingers at each other about who changed the language in the stimulus bill that would have capped the bonuses, the bottom line is: they still would not pass such a bill today. Geithner and Summers were spinning a story at the time about how they couldn’t cap compensation because the banks wouldn’t take the money. Now they’re saying it’s because of litigation, and we can’t have that.
I do not think that anyone understands that some Rube Goldberg model, where we pay out a billion in bonuses, and then try to get the money back in taxes, is going to be a winner. But that appears to be what the administration wants, because both Nancy Pelosi and Barney Frank are saying the same thing. Then again, we’re talking about a bunch that thought this wouldn’t be a big problem in the first place, at least not one they couldn’t solve with faux "outrage" and blaming Chris Dodd.
I’m fairly confident they’ll have a chance to rethink this in the near future — somewhere around the time Tim Geithner’s "I knew nothing" story crumbles. The only question is how much public rage they’ll have to suck up before they face that reality.