Furor over AIG Bonuses

Suddenly, AIG is everyone’s new favorite whipping boy.

Not that they don’t deserve it. The outcry about taxpayer-funded bonuses for the managers who got AIG (and all the rest of us) into this mess in the first place has provoked a huge response both in Connecticut and in the nation’s capital.

Here’s a rundown of what’s happening now.

As it turns out, the bonuses are to be paid at AIG’s Wilton facility, which is their Financial Products division. Apparently AIG has cooked up a legal necessity for giving out the bonuses, based on an obscure Connecticut law. So yes, it’s the state of Connecticut’s fault!

Except that Richard Blumenthal is pretty sure that the Connecticut Wage Act, the law AIG is citing, doesn’t justify the bonuses after all.

Meanwhile, there has been a scramble to make sure this can’t happen again. House and Senate Republicans called for the law to be changed. The measure should have bipartisan support, and the bill is already written. Man, they can move fast when they want to.

In Washington, there has been an effort to blame Chris Dodd for the mess, because why not? It’s not as if he isn’t already down. Aim your kicks well, gentlemen. However, Media Matters has uncovered the uncomfortable fact that Dodd is not to blame after all. So Fox Business and the Drudge Report weren’t accurate? I may have to rethink my worldview.

Our House delegation has been busy, as well. Rep. Joe Courtney spearheaded an effort to send a letter to Treasury Secretary Geithner demanding a full accounting of the bonus situation. It was cosigned by 94 others. Here is a .pdf of the letter.

Rep. Chris Murphy will be holding a conference call later today to announce legislation that would block these kinds of taxpayer-funded bonuses in the future.

As of now, it looks like AIG will have to pay back the money, which amounts to about $165 million. That may be the first strong stand Secretary Geithner has taken. Good for him.

That’s where things stand right now. If I had to guess, those AIG guys probably aren’t going to get to keep their bonuses. They will, however, become one of the bywords of economic greed, and a rallying point for those who want to either punish the system, or tear it all down entirely.

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17 responses to “Furor over AIG Bonuses

  1. Blame Chris Dodd? Do you mean to tell me that if a Republican in CT had taken over $100,000 from AIG in contributions the Dems wouldn’t be making out of this? Seriously. I think there is a more concerted effort to link Republicans with Rush Limbaugh and George Bush than an effort to blame Dodd. Dodd has done this all on his own.

  2. I think the current flap is over language in an amendment that people were saying Dodd put in that created a loophole allowing the bonuses. Apparently that is not the case.

    Dodd’s contributions from AIG and the rest of the financial sector are another matter, and absolutely fair game for Rob Simmons, Sam Caligiuri and everyone else.

  3. In Washington, there has been an effort to blame Chris Dodd for the mess, because why not? It’s not as if he isn’t already down. Aim your kicks well, gentlemen. However, Media Matters has uncovered the uncomfortable fact that Dodd is not to blame after all. So Fox Business and the Drudge Report weren’t accurate? I may have to rethink my worldview.

    Fromyour “Media Matters” cite: “While the Senate was constructing the $787 billion stimulus last month, Dodd added an executive-compensation restriction to the bill. That amendment provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009″ — which exempts the very AIG bonuses Dodd and others are now seeking to tax.”
    Perhaps you’d like to clarify? Barney Frank sure disagees with you.

  4. That’s from the Fox Business article, which has since been debunked. Go back and re-read the Media Matters piece.

  5. That’s from the Fox Business article, which has since been debunked. Go back and re-read the Media Matters piece.

    My mistake, buy why is Barney tossing Dodd under the bus?

  6. famillionaire

    As of now, it looks like AIG will have to pay back the money, which amounts to about $165 million. That may be the first strong stand Secretary Geithner has taken. Good for him.

    This is not good. This is not strong. This is simply moving money around. So they give back $165m out of $200b…so what. That’s an accounting error. Let’s not get bogged down in the details here – it is a big sham. It is the uber-wealthy ‘money movers’ who have pulled one over on the Congress and the American people. Are they a business or not? Is this America or not? Let them fail, liquidate assets and get our taxpayer dollars back. The rich are getting richer off of the American public.

    Disgusting – especially as these are the same people who have been complaining for years about so-called ‘welfare’ when they are the biggest recipients.

  7. CrankyYankee71

    The Democratic furor over the amount of these bonuses is rich. (And, for that matter, so is the furor coming from any Republican who did not oppose taxpayer money going to prop up pivate industry.)

    The AIG bonuses amount to less than 1/10 of 1% of the money thrown at AIG. A week ago, the Dems were arguing that the media was making too much of all the pork/earmakrs in the budget bill, which Obama said he would put an end to, because the pork only amounted to about 1 or 2% of the total spending.

    By my simple math, the Dems should have been ten times more furious over their own spending and should be looking to impose a 100% tax on the recipients of the earmarks.

  8. These idiots in DC know how to write laws – if they ant to restrict bonuses, or to provide that no fed bailout money be used to increase exec pay, they know how to do so. They failed to include those safeguards in the bill. Too late to come back and say AIG didn’t follow the law – they are doing precisely what Congress allowed them to do.

  9. Lou Dobbs was reporting the same thing last night. ..not just Fox. Did Media Matters go after his report as well? The bottom line is Dodd is in pretty deep here. Quite frankly I think the media, you Ghengis and all the good government people have been pretty easy on him. After the Rowland debacle, ethics was supposedly a big deal here in CT. But obviously ethics takes a back seat to philosophy and partisanship.

  10. Lou Dobbs was reporting the same thing last night. ..not just Fox. Did Media Matters go after his report as well? The bottom line is Dodd is in pretty deep here. Quite frankly I think the media, you Ghengis and all the good government people have been pretty easy on him. After the Rowland debacle, ethics was supposedly a big deal here in CT. But obviously ethics takes a back seat to philosophy and partisanship.

    Well said, and your comment about the media applies particularly to the Connecticut Media. Couldn’t find a peep about Dodd’s participation or contributions from AIG in today’s Courant or Register.
    And don’t you love Cafero, Blumenthal, et al, scrambling for face time on this. This from the same crew that has put Connecticut inti one big financial hole, and are incapable to anything serious about it,

  11. Dodd took credit for the stimulus language. google it. Dodd is credited for the provision in dozens of news articles. He’s quoted in many of them, including New York Times, which wrote on 2/13:

    The provision, written by Senator Christopher J. Dodd, Democrat of Connecticut, highlighted the growing wrath among lawmakers and voters over the lavish compensation that top Wall Street firms and big banks awarded to senior executives at the same time that many of the companies, teetering on the brink of insolvency, received taxpayer-paid bailouts.

    “The decisions of certain Wall Street executives to enrich themselves at the expense of taxpayers have seriously undermined public confidence,” Mr. Dodd said Friday. “These tough new rules will help ensure that taxpayer dollars no longer effectively subsidize lavish Wall Street bonuses.”

    http://www.nytimes.com/2009/02/14/business/economy/14pay.html?hp

    Dodd sure thought he was the author of the final provisions.

    did Dodd’s press office seek corrections? They sure didn’t mind the credit before the AIG issue exploded.

  12. Here is the March 17 Fox report:
    http://www.foxbusiness.com/story/markets/industries/finance/dodd-cracks-aig—time/

    “While the Senate was constructing the $787 billion stimulus last month, Dodd added an executive-compensation restriction to the bill. The provision, now called ‘the Dodd Amendment’ by the Obama Administration provides an ‘exception for contractually obligated bonuses agreed on before Feb. 11, 2009′ — which exempts the very AIG bonuses Dodd and others are now seeking to tax.

    “Dodd’s original amendment did not include that exemption, and the Connecticut Senator denied inserting the provision.

    “’I can’t point a finger at someone who was responsible for putting those dates in,’ Dodd told FOX. ‘I can tell you this much, when my language left the senate, it did not include it. When it came back, it did.’

    “’Because of negotiations with the Treasury Department and the bill Conferees, several modifications were made,’ Dodd Spokesperson Kate Szostak in a response to FOX Business.

    “The provision excluding those bonus payments made it into the final version of the bill, and is law.

    “Separately, Sen. Dodd was AIG’s largest single recipient of campaign donations during the 2008 election cycle with $103,100, according to opensecrets.org. Also, one of AIG Financial Products’ largest offices is based in Connecticut.

    “’Senator Dodd was completely unaware of these AIG bonuses until he learned of them in the past few days,’ wrote Szostak. To suggest that the bonuses affecting AIG had any effect on Senator Dodd’s action is categorically false.”

    The Fox report is just a series of descriptive facts. And it is not the report — which , by the way, included the debunking by Dodd Spokesperson Kate Szostakn — that has been debunked.

    Dodd claims that someone other than he included the exemption in the bill he wrote.

    The following line, included in the Fox report – “Dodd’s original amendment did not include that exemption, and the Connecticut Senator denied inserting the provision” – was not included in Media Matters’ report on the Fox report, an invadvertant omission no doubt.

    Perhaps Dick Blumenthal can be conscripted to find out who the real author of the exemption is.

  13. Let’s see,
    Dodd was for the bonuses before he was against them.
    I don’t understand all the furor over 165 milion or so.
    Where is all the backlash that ACORN gets 500 million per yer because of Barney Frank. Dodd tried to get ACORN a 700 million lump sum payout in the First TARP deal before the election. And Franks and/or Dodd was successful in getting ACORN and its affiliates 4 billion in the latest bailout bill. And now ACORN is invited to participate in the Census.
    Unbelievable!

  14. Dodd had no problem praising himself and “an amendment I authored” on the floor of the Senate on 2/13. He starts talking about his amendment at the 6:30 mark

  15. Where is that fat ass from CCAG? Or that other dork from CCAG?

    If this were a Republican Senator, those phonies would be following him around on a flat bed with a miniature Irish cottage.

    Disingenuous hacks.

  16. So the exemption on any bonus that is pursuant to an employment contract agreed to before Feb 11 IS in the final conference committee bill. And as Barney Frank has stated, Chris Dodd put that amendment in place DURING the conference committee. The original date in earlier versions of the bill was january 31st, so it seems like that conference committee knew exactly what they were doing when they extended the drop dead date another 11 days. And a tip off from someone involved to AIG to redraw contracts after january 31 but before Feb 11 would seem to be the smoking gun. Now that we taxpayers own 80% of AIG, can we please see the contracts (redacted, of course) of the AIG execs to see the date when they were signed. If they knew that the fed bill would preclude bonuses paid with stimulus money, and then rewrote the contracts of those employees, and then Congress grandfathered in those contracts, we need to see all communications from Dodd’s office to AIG during the two week period in question.

    And why did financial whiz Jim Himes go for this? Isn’t he supposed to understand big finance better than anyone?

  17. Dodd’s senate history and his long political/fundraising ties to the financial services community discredit his efforts to improve his public approval. He will also have to rethink his political fundraising efforts, unless he sees no reaction to donors who have benefited from the federal stimulus efforts.

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