American International Group (AIG) has triggered a national anger at corporate greed over bonuses paid to corporate executives. Congress and the Treasury Department are scrambling to recover $165 million paid to AIG executives as “retention awards” aka bonuses from taxpayer bailout money.
It remains to be seen if the recovery effort is successful. It is claimed that wording was inserted in the bailout which allowed AIG to pay the bonuses during the reconciliation phrase between the Senate and the House. The reconciliation takes place behind closed doors free of public view. As is common no one read the final bill before it was sent to the President.
It has been public knowledge since last November that AIG intended to pay those bonuses. AIG announced on November 25, 2008 “it scrapped bonuses for top executives after a U.S. bailout, will still pay 130 managers "cash awards" to stay with the firm, including $3 million to retirement services chief Jay Wintrob,” according to Bloomberg. The claim that AIG had “scrapped bonuses” really meant they changed the name of the payments from “bonus” to “cash awards.” Not a very clever ploy, but clever enough to escape notice by Congress and the Treasury Department. I thought those people at Treasury and in Congress were supposed to be smart.
Four things come to mind. (1) Congress should never sign off on final legislation without fully reading what they are sending to the President to sign; (2) reconciliation proceedings should be held in full public view; and (3) the bailout to AIG should have been conditioned upon rescission of those bonus contracts before the money was paid to AIG. One would think those people elected to Congress by the voters would read laws that cost multibillions of taxpayer dollars before they pass them. No wonder the nation’s finances are in such a mess. Members of Congress and of the Obama administration should likewise read those bills before signing them into law; (4) voters shouldn’t re-elect people to Congress who are so negligent or incompetent that they can’t carry out their obligations with care.
AIG isn’t the only outfit receiving bailout monies that intend to pay bonuses. Fannie Mae is set to pay retention bonuses, with some top executives at the mortgage giant planning to receive more than $1 million. Freddie Mac has yet to release bonus figures. Representative Barney Frank (D-Massachusetts) has requested Fannie Mae and Freddie Mac cancel payments at the mortgage giants now under government control. One would have thought that the bailouts to those two would have expressly prohibited any bailout money be used to pay bonuses. It is as though those people in Washington, D.C. have no clue about such carelessness with money.
These bonuses are not the only dumb acts by Congress. Thirteen recipients of U.S. bailout money owe the federal government back taxes. Two of them owe more than $220 million in unpaid taxes. Some of those companies signed statements that did not owe back taxes. Seems to me someone could have simply asked IRS before they forked over the bailout money to any of the thirteen companies.
So far, more than $300 billion of TARP funds have been disbursed to financial services institutions including Citigroup, Bank of America and AIG.
An argument being advanced by some members of Congress is that employees of these failed companies shouldn’t be rewarded with bonuses. By the same token one could say those companies are being rewarded by an incompetent Congress. Incompetent members of Congress shouldn’t be re-elected.
I think MSNBC’s Keith Olbermann got it right. “Five weeks ago Vikram Pandit, the chief executive officer of Citigroup, went back to Congress, tail seemingly between his legs, and, with entreaty dripping from his voice, announced ‘I get the new reality and I’ll make sure Citi gets it as well.’
“In point of fact, as Bloomberg News reports today, what Mr. Pandit ‘got ‘was a new $10 million executive suite for himself and his key associates.
“This is the same Mr. Pandit who said he would show his leadership by accepting compensation of $1 a year. In fact, he then ‘accepted’ a total compensation package for 2008 of $38 million,” Olbermann charged.
“Enough!” Olbermann added.
A reminder, members of the U.S. Senate and the House of Representatives are up for re-election next year. Are you up to holding them accountable?
Related posts:
Have you ever looked into the “bonuses” powerful Senators reap through their campaign slush funds and PACS?
If you look into Harry Reid and his Searchlight Leadership Fund for the years 2003-2008, the income from his campaign fund and his PAC is (drum roll please): $17,306,886, or an average of $2,884,481/yr. over and above his Senate salary which he has raised every year.
So exactly what does Reid do with this extra $3 million a year. The Senate has exempted itself from reporting expenditures
AIG is just more of the rich feeding the rich….