by Frank James
President Barack Obama reacted angrily today to reports that American Insurance Group employees received $165 million in bonuses even as the giant insurer was being sustained by billions of dollars of taxpayer money, saying he would use his administration's power to block the bonuses.
Obama, who made the remarks at a White House event called so he could announce his administration's efforts to free up lending to small businesses, said he had asked Treasury Secretary Tim Geithner to take steps to prevent the bonuses from being paid.
"Under these circumstances, it's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay," Obama said. "How do they justify this outrage to the taxpayers who are keeping the company afloat?
"In the last six months, AIG has received substantial sums from the US Treasury," he continued. "I've asked Secretary Geithner to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole. "
It was unclear what the White House could do legally to stop the bonuses, which reportedly ranged from $1,000 to $6.5 million and were mainly being paid to executives in AIG's financial products division.
It was that division that marketed credit default swaps, financial instruments that were essentially bets on which companies were most likely to default on their debt. CDS contracts have injected fear throughout the financial system since they create such large obligations for the financial institutions selling them that they threaten the companies with insolvency.
Disclosure of the bonuses over the weekend has led to outrage around the country, fanning already strong populist anger aimed at financial institutions viewed as having contributed significantly to the financial crisis and economic recession.
The AIG situation is especially galling for many policymakers and Americans alike, creating a backlash, since the company has received $170 billion in federal bailout funds.
Continued reports of seeming corporate excesses like those at AIG have created a tremendous political problem for the administration. The administration is close to announcing a new plan in which it will partner with the private sector to take so-called toxic assets off the balance sheets of major financial institutions in hope of freeing up bank lending. That effort will require more federal money.
So Obama wanted to make sure he communicated his displeasure. At one point after he experienced a coughing fit during his remarks, he joked: "Excuse me, I'm choked up with anger here."
Separately, New York State Attorney General Andrew Cuomo, who has been investigating bonuses and other compensation from AIG, on Monday demanded that Chief Executive Edward Liddy provide by 4 p.m. Eastern time today a list of employees who are receiving the bonus payments and the contracts requiring the bonuses to be paid. In a letter to Liddy, Cuomo said the information was needed to determine whether any of the people receiving the bonuses "were involved in the conduct that led to AIG's demise and subsequent bailout."
"Taxpayers of this country are now supporting AIG, and they deserve at the very least to know how their money is being spent," Cuomo wrote. "And we owe it to the taxpayers to take every possible action to stop unwarranted bonus payments to those who caused the AIG meltdown in the first place."
After expressing his outrage at the AIG bonuses, Obama turned to the reason for the event, his plan to increase loans to and relieve the tax burden on small businesses.
Obama said the Treasury Department try to jump start the secondary market for small business loans by purchasing up to $50 billion in securities backed by such loans, among other measures.
Meanwhile, Geithner, who was also at the event, announced that the Internal Revenue Service was instructed to let small-business owners use losses going back five years instead of two years to offset any current profits, a move that would allow such businesses to increase their cash flow.
Geithner also made a plea for banks to start lending again, saying their failure to lend at sufficient levels was leading companies to cut back, helping to reinforce a vicious cycle.
"... You banks need to make the extra effort to make sure that good loans are getting to creditworthy small businesses in order to serve the larger public good of moving this nation to recovery," Geithner said.
Comments
The White House knows the kind of harsh blowback they’ll get over AIG and the rest of the bailouts. It’s the one issue that voters are opposed to Obama’s handling.
And, ironically, it’s the issue that the GOP has ignored - for now…
http://www.political-buzz.com/
Posted by: matt | March 16, 2009 1:36 PM
Who were the "outraged" idiots that voted for this bailout?
Yes, Government. Very good.
All the earmark supporters, need to look at this as a very small % of the bailout money, and think of it as a "small earmark".
Doesn't it make Harkins pig stink smell sweet. LOL.
OH, it's TV time for these Govt., idiots who voted for the situation.
Posted by: PG | March 16, 2009 1:41 PM
Apparently, AIG was so troubled over the issue of corrupt fundraising activities that they loaded in as one of the top VIP donors in McCain's nonprofit think-tank, whose website lists AIG in the "over $50,000" donor category--although exactly how much over that $50,000 is still unclear.
Posted by: eye can whine too | March 16, 2009 1:43 PM
After Obama’s speech and actions today regarding the looters at AIG, it certainly appears that the ‘big swinging dicks’ on Wall Street are going to be cut off from their money supply --- or maybe simply ‘cut off’.
Alan MacDonald
Sanford, Maine
Posted by: Alan MacDonald | March 16, 2009 2:08 PM
The AIG execs claim that the bonuses are contractual and negotiated in 2008. In other words, last year's business. Kind of a lame excuse when they are using tax payer funds. Almost as lame as when Obama used the same argument to justify a spending bill fat with earmarks. The major difference being that AIG could be liable for breaching the contracts, while all Obama had to do was stand up to Pelosi.
Posted by: Herbie H. | March 16, 2009 2:11 PM
DO YOU HEAR THE ANTIBAILOUT PEOPLE SING
(Les Miserables, Do You Hear the People Sing)
WilliamBanzai7
Sing along: http://www.youtube.com/watch?v=x6-5g78Nr6Q
NOURIEL ROUBINI
Do you hear the people sing?
Singing a song of angry of taxpaying men?
It is the music of a people
Who will not let AIG get bailed again!
When the beating of your heart
Echoes the beating of the anti bailout drums
There is a new economic life about to start
When tomorrow's opening bell comes!
LARRY SUMMERS
Will you join in our anti bailout crusade?
Who will be strong and stand with me?
Beyond the financial barricade of opacity
Is there a transparent world you long to see?
BARNEY FRANK:
Then join in the fight
That will give you the right to be debt free!
ALL
Do you hear the people sing?
Singing a song of angry taxpaying men?
It is the music of a people
Who will not be subprimed and PONZI schemed again!
When the beating of your heart
Echoes the beating of the anti bailout drums
There is a new economic life about to start
When tomorrow's opening bell comes!
BERNANKE
Will you invest all you can invest
As sure as our anti bailout banner may advance
Some bad banks will fail and some good will live
Will you stand up and take your chance?
The blood of the bear market
Will water the meadows of our own recovery and not France!
ALL
Do you hear the people sing?
Singing a song of angry men?
It is the music of a people
Who will not let AIG get bailed again!
When the beating of your heart
Echoes the beating of the anti bailout drums
There is a new life about to start
When tomorrow's opening bell comes!
Posted by: williambanzai7 | March 16, 2009 2:12 PM
Phony "outrage" by one set of porkers against another set of porkers.
The members of Congress who sactioned the AIG bailout should be forced to give back THEIR raises. And the Treasury Secretary who promoted the bailout, tax-cheat Tim, should be fired.
Posted by: Inconvenient Truths | March 16, 2009 2:18 PM
OhOh. He opened his mouth. Down goes the market.
Posted by: Ima Bonus | March 16, 2009 2:25 PM
The libs give taxpayer bucks to AIG with no strings attached and then wonder why they pay PRE-EXISTING, CONTRACTUAL, MERIT-BASED bonuses? And now Andrew Cuomo is going all Gestapo and demanding the names of all bonus recipients or he will start issuing subpoenas? Sounds kind of Orwellian to me.
To arms! To arms! The Obamunists are coming! The Obamunists are coming!
Posted by: Vast Right Wing Conspirator | March 16, 2009 2:54 PM
AIG is a product of a wink and a nod from George Bush. I'll bet what is left of my 401K that Bush believes in God but never fails to lock his car. ............
http://thefiresidepost.com/2009/03/16/trust-god-but-lock-your-car-2/
Posted by: Ohg Rea Tone | March 16, 2009 3:10 PM
AIG bonuses are really annoying and pretty much highlight what type of greed and arrogance exists at many companies corporate executive leadership...the problem here is that we only dumped a bunch of money on AIG- we did not buy the entire company and we did not make a condition of the bailout that they do not honor contract that included these bonuses...if this were the case couldn’t we make the same demands of GM to not honor it’s labor agreements? It would be morally and ethically correct for AIG to not pay these bonuses- but they were not obligated to hold them back.
Doesn't anyone find it really frightening to think that the president has a process to "use his administration's power to block the bonuses"?
Will this same power be used to ensure companies follow the dictates of his administrations plans...make electric cars or else! How far of a leap are we from a devout Catholic doctor from being forced to perform an abortion or lose his or her license?
Posted by: heartburn | March 16, 2009 3:11 PM
Right. Only a vast right wing conspirator could contend the bonuses were "earned" and based on "merit".
Since reportedly taxpayers own 80% of AIG, now the compensation committee minutes come out and all the other "documentation" of how they "earned" and "merited" this windfall.
Equally outrageous: AID Tarp money paid to Goldman Sachs
doled out by former employees Kash & Karry and Paulson.
Not to mention UBS, which continues to withhold info on the 42,000 secret accts held there by American taxdodgers, er , taxpayers.
You guys are waving the red cape right under Obama's nose.
Posted by: ornery | March 16, 2009 3:14 PM
Hey Obama, here's an idea: STOP GIVING THEM FREE MONEY TO PAY THESE BONUSES WITH!
I'm sick and tired of hearing from BOTH recent administrations that AIG is "too big to fail." Really? Why not give failure a chance. Let's remember, THEY'RE NOT EVEN A BANK!
AIG says they're paying banks that already got TARP money. Is it just me or does that sound like double dipping?
Obama can't get the bonuses back, because they're contractually guaranteed and the people getting paid them can always get other jobs in Dubai or China if their companies illegally withhold the bonuses. This is why having the federal government dictate business terms to the private sector simply does not work.
p.s Big Swinging Dicks. I love the new swamp and its wonderfully open philosophy about what is and isn't inappropriate or profane.
Posted by: Jeff | March 16, 2009 3:19 PM
The bonus payout excesses at AIG are just the tip of the iceberg of what is happening with the other Wall Street bailouts including Bank of America. Working productive Americans are bailing out the same crooks that destroyed our economy along with 45% of the wealth in the world and now the American taxpayers and our children will be forced to live a far lower standard of living with reduced prosperity and opportunities due to this but only we pay the price.
Washington has bailed out the banks, Wall Street & their Washington special interests and much of the cost is added to the national debt to by paid by this and future generations while real estate and investments continue to fall. Find out what a growing repudiate the debt movement could mean for treasuries, the dollar, gold and the stock market and how this is a better alternative than Washington’s plans to monetize the debt in future years and tax and destroy our remaining wealth by depreciating the dollar.
The Campaign to Cancel the Washington National Debt By 12/21/2012 Constitutional Amendment is starting now in the U.S. See: http://www.facebook.com/group.php?gid=67594690498&ref=ts
Posted by: Ron | March 16, 2009 4:10 PM
If any of you are US citizens between the ages of 18-29 would you mind filling in my questionnaire through the link below??
http://www.esurveyspro.com/Survey.aspx?id=1d29da2f-7773-436b-8ea2-3cb756a15063
If for any reason you want to forward this message on to anyone who is also from the US (between those ages) it will be much appreciated!
Thanks soo much
Sophie x
Posted by: Sophie | March 16, 2009 4:16 PM
PG.. it's loans from the Federal Reserve; which isn't run by "libs" vast right wing lunatic.
Posted by: mort | March 16, 2009 4:39 PM
"Working productive Americans are bailing out the same crooks that destroyed our economy along with 45% of the wealth in the world and now the American taxpayers and our children will be forced to live a far lower standard of living with reduced prosperity and opportunities due to this but only we pay the price."
You mean like the $5.4 TRILLION in debt our government assumed when it took over Fannie Mae and Freddie Mac? Debt that can only be paid by the taxpayers since the people holding bad mortgages from them can just walk away? When you talk about the crooks still being in charge do you include Barney Frank, who said Fannie and Freddie were "going to be fine" three months before the takeover?
Posted by: Jeff | March 16, 2009 4:44 PM
Um, 'scuse me Mort the Clueless Wonder, but it was libs who wrote every stinking scrap of the bailout legislation to date.
Posted by: Vast Right Wing Conspirator | March 16, 2009 5:09 PM
Why close the barn door after the horse is gone?
Posted by: ml | March 16, 2009 5:12 PM
Why is Obama outraged?
So what if AIG lost money and is paying bonuses?
Haven't all those foreclosed mortgage owners and credit card abusers lost money and aren't we, the taxpayer, giving them a financial break BY BAILING THEM OUT WITH OUR MONEY!
It's the same damn thing. The government stinks.
Obama stinks!
It was his man, Geithner, who crafted this mess.
And Pelosi and Reid who bundled more money into the stimulus bill.
Posted by: Stan | March 16, 2009 5:15 PM
"Who were the "outraged" idiots that voted for this bailout?
Yes, Government. Very good."
I guess the Federal Reserve (a part of the Govt') runs itself. You don't think they have a little round table where they talk about such things then vote on it.
Then you have the distain of TV Politicians saying how bad AIG is, but could you add another 8 billion dollars for a cho cho train from LA to Vegas, gee thanks.
And yes, Fed' Res', is an appointment position appointed by Pres. Obama.
Posted by: PG | March 16, 2009 5:34 PM
Now Eric Cantor & Mitchelle McConnell have their issue.
Posted by: ornery | March 16, 2009 5:40 PM
I guess I can make this easier.
Congress=535 members.
I said Govt', not Congress.
I guess I should've said those who voted at the Federal Reserve, might have made it easier to understand. That's my fault.
Posted by: PG | March 16, 2009 5:47 PM
Vast Right Wing, the money that went to AIG consisted of loans from the Federal Reserve, as I already said. Plus you also ignore the bailouts that were done by Paulson. Who's clueless?
Posted by: mort | March 16, 2009 5:57 PM
Jeff, you're demagoguing; and of course changing the subject again. Now, since you want to be the policeman of the Swamp, please ask the Vast Right Wing person to tone down his meanspirited rhetoric--especially since he's wrong.
Posted by: Flo | March 16, 2009 6:02 PM
AIG = Allowing Irreversible Greed.
AIG = All in Greed.
AIG = Arn't I Greedy.
AIG = A$#holes, in general.
This is sick. Why in the world are we helping these companies that keep sending millions to people who do not know how to run a company? They cry yet get paid millions on the "average joes" taxes. Furthermore, I fear this is just the tip of the iceberg. Look what Enterprise rent-a-car did to get bailout funds:
http://www.butasforme.com/2009/02/25/alert-enterprise-rent-a-car-may-have-fired-employees-as-fake-evidence-when-lobbing-for-bailout-money/
Not to make excuses for these people, but the bailouts are making crooks out of everyone that touches the money.
Posted by: Jax | March 16, 2009 6:48 PM
"Vast" Bonehead, I think you got it wrong. The Fed loaned money to AIG last year. It's not part of bailout legislation written by libs. Get some manners, dude.
Posted by: rupert | March 16, 2009 7:27 PM
The Congress should add a special section to the tax code (as they have so often in the past) that taxes all bonuses paid by any companies receiving taxpayer "bailout" funds at %110. Get our money back from these incompetent idiots.
Any company stupid enough to sign a contract with any employee that requires them to pay a bonus when the company loses money should not be rescued from their stupidity.
Posted by: Jeff | March 16, 2009 8:00 PM
Excuse me VRWC, but it was the pug bankers that caused this mess, using loopholes that their close friends, the pug lawmakers, created for them. Don't throw the dems under the bus for trying to fix your mess. Also the pugs greatly supported these bailouts early on.
On topic though, the problem with these bonuses is that they are not bonuses. They are an illegal form of income that corporate pug America uses to cheat on taxes by funneling income through their top employees' life insurance benefits. I hope the trib and Obama catch on to this and close up this loophole.
Posted by: Xcellentform | March 16, 2009 9:03 PM
AIG could possible make political donations and all could blow over-
Posted by: Inky | March 16, 2009 9:31 PM
I think that it is time to pass a law requiring transparency to shareholders in the award of bonuses.There must be objective criteria based on performance for awarding bonuses, In the case of derivative traders I can hardly comprehend what criteria was used to give bonuses except that traders at other companies got similar bonuses. Comparison to competitors needs to be abandoned as having any relevance to compensation. Achievement of goals should be all that counts at the upper levels of management.
Posted by: Ron M | March 16, 2009 10:06 PM
TAX ALL INCOMES OVER $1.0 MILLION AT 80%
Obama with a Democratic Congress should impose an 80% tax on all compensation over $1.0 million.
This sounds outrageous, but the only way corporate America is able to pay these salaries is the taxing of middle America, who is steaming mad at these excessive payouts.
Approval ratings and support from middle America is extremely important, but what they are mad about is how unfair this Depression has been so far. Big salaried Wall Street investment bankers are thumbing their nose to this administration. So let them know who is really boss. TAX THEM.
No one will argue with bill salaries when 80% goes back into the US Treasury!!
Posted by: Michael Tracy | March 16, 2009 10:52 PM
Remember, it was only a month ago that Geithner was giving AIG ANOTHER $30 billion in bailout money. Glad he demanded accountability (not).
Posted by: Jeff | March 16, 2009 11:16 PM
Congress to AIG: Who taught you how to do this stuff? AIG: YOU, ALRIGHT? I LEARNED IT FROM WATCHING YOU!!!
Posted by: Jeff | March 17, 2009 12:17 AM
Vast right wing conspiracy just threatened my prez and I am SICK of the Swamp posting the THREATS against Obama. As for Stan--WHAT MORTGAGES GOT ANY MONEY? I WISH THEY WOULD JUST GIVE EACH ADULT OVER 18, OR EACH HOMEONWER 13 GRAND. IT WOULD BE ABOUT WHAT WE'VE EACH SPENT ON THE INVASION AND OCCUPATION OF IRAFGAKISTAN.
Posted by: Obama will stop the thievery | March 17, 2009 12:55 AM
Just read the NYT archives about Turbo Tim working tirelessly on the AIG bailout as head of NY Fed. Now he is Tres. Sect. Guess he was clueless about bonuses then as he is now. Congress approved the money (Senator Obama and McCain). Were they also clueless? And we expect more govt. involvement in our lives? Obamaland is a sham!
Posted by: bubba Porter | March 17, 2009 8:03 AM
Funny looking back at the Bank bailout VS Auto bailout. Notice the hate for the evil union workers......then read the posts about banking bonuses.......people more upset with stimulus than bonuses.
Best way to save the auto industry is get rid of the union and will make the American Auto Industry world competive.
Posted by: Inky | December 4, 2008 2:16 PM
"Outrageous'' - that's the word for the fraudulent porkulus bill that Obama is trying to cram down our throats. I'm far less outraged by $18.4 billion in bonuses than I am about $850 billion in pork.
Posted by: Vast Right Wing Conspirator | January 29, 2009 2:32 PM
The PORK STINK will make the Banking Bonus look like nickles and dimes.
Posted by: Inky | January 29, 2009 4:43 PM
Shameful? No more shameful that that stimulus package they're trying to pass off on us which is a big "pork" thank you list for his parties buddies.
Posted by: vla | January 30, 2009 9:11 AM
Hey, if Obama can change the terms of the deal ex-post-facto, then so can Goldman Sachs. In the end the only voters Obama will have left will be the deadenders like Mr. Piggy up there. Goldman employs a lot of people.
Posted by: Jeff | February 5, 2009 12:22 AM
UAW workers' compensation amounts to $75 per hour--much more than compensation in non-union auto plants, and far more than the average American worker.
What Detroit and the UAW want is for American taxpayers making say $20 per hour to pay money to people making $75 per hour.
Posted by: Change you can believe in | November 19, 2008 2:14 PM
Posted by: bill r. | March 17, 2009 9:08 AM
It was the Bush administration and the criminal Paulson who initially gave away taxpayers monies to Wall Street with no strings attached and absolutely no oversight or accountability. Anyone who says otherwise has been overdosing on the deluded bloated one, Limpbaugh.
Posted by: Doug R. | March 17, 2009 9:38 AM
When the first bailout legislation was passed and discretion given Kash&Karry and his old boss at Goldman Sachs, Paulson, I said right here this was going to be the biggest bank heist of all time.
So now a little bit more of the truth comes out: Yes, AIG Tarp monies went to--you guessed right--
Goldman Sachs.
How convenient for Paulson and Kash&Karry .
Posted by: ornery | March 17, 2009 10:01 AM
Chris Dodd is responsible for protecting the money paid out to the people at AIG.
He is responsible for the portion of the bailout bill that states any bonus agreed to prior to February 9, 2009 will not be abrogated in any agreement with the United States government.
Posted by: Pat H | March 17, 2009 11:08 AM
Chris Dodd is responsible for protecting the money paid out to the people at AIG.
He is responsible for the portion of the bailout bill that states any bonus agreed to prior to February 9, 2009 will not be abrogated in any agreement with the United States government.
Posted by: Pat H | March 17, 2009 11:08 AM
I call BS. Please post facts.
Posted by: bill r. | March 17, 2009 12:38 PM
Hey Pat,
http://www.google.com/search?hl=en&client=safari&rls=en&q=dodd+says+march+18+2009&btnG=Search
People should start asking lots of questions aimed at Politicians.
Anyone who believes or takes a Politician at his/her word is either in denial or naive.
Posted by: PG | March 18, 2009 7:35 PM