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AIG Bonus-Gate Rocks Dodd, Administration
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| Rep. Steve Israel, D-N.Y., left, gestures during a news conference on Capitol Hill in Washington yesterday to discuss AIG bonuses. (Evan Vucci/Associated Press) |
By Joe Murray, The Bulletin
News that AIG, the failed company that received $170 billion in taxpayer funds, distributed $165 million worth of bonuses to company executives who worked for the division that caused the company’s downfall has caused a political earthquake.
It is shaking the newly poured foundation of the Obama administration and sending a prominent Connecticut lawmaker scrambling.
On Monday, the White House tried to quell public outrage over the scandal, but it stumbled out of the gate, as press secretary Robert Gibbs could only tell the press government lawyers were “looking through contracts to see what can be done to wrest these bonuses from their recipients.”
But news of the bonuses put added pressure on the back of U.S. Sen. Chris Dodd, D-Conn., who was responsible for crafting an amendment to the $787 billion stimulus package that restricted executive compensation, but provided for an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009.” The AIG bonuses would fall under such an exception.
Mr. Dodd, who is facing a tough re-election campaign in 2010, was the largest beneficiary of campaign cash in the 2008 election cycle. Mr. Dodd received $103,000 from AIG, while Mr. Obama came in a close second at $101,332. Mr. Dodd’s office was quick to shoot down allegations of foul play.
A spokesman for Mr. Dodd told Fox News the lawmaker “was completely unaware of these AIG bonuses until he learned of them in the past few days; to suggest that the bonuses affecting AIG had any effect on Sen. Dodd’s action is categorically false.”
In response to the scandal, lawmakers began floating the idea of taxing the AIG bonuses to recoup some of the money the government has paid to AIG. Senate Majority Leader Harry Reid, D-Nev., took to the Senate floor yesterday and promised legislation addressing the issue would be presented within hours.
“Remember, we as a Congress are not defenseless,” Mr. Reid said. “We can also do things.”
He added, “Recipients of these bonuses will not be able to keep all of their money. And that’s an understatement.”
House Speaker Nancy Pelosi, D-Calif., spent yesterday afternoon rolling out legislation that would broaden the attorney general’s powers to recover the bonus money. Mrs. Pelosi had ordered three House committees to produce legislation and hoped for a vote sometime next week.
“We have repeatedly called on executives at corporations that have taken our financial system to the brink of collapse with irresponsible business practices to return their bonuses and other financial rewards,” Mrs. Pelosi said. “Most appallingly, while millions of Americans struggle through this economy, those who have received the largest measure of taxpayer assistance from the Treasury Department have shown no restraint.”
Republicans, who long argued against the bailouts, made it a point to show Democrats the error of their ways.
“Wouldn’t the Treasury and the taxpayer have had more leverage over AIG’s executive contracts before providing another $30 billion in taxpayer money rather than allowing the bonuses to be paid with taxpayer money?” asked Senate Minority Leader Mitch McConnell, R-Ky.
A number of lawmakers attempted to appeal to the conscience of the AIG executives and asked for them to return the money.
“It is unquestionable however that payment of these bonuses would lavishly reward some of the very individuals responsible for the near collapse of AIG,” Sen. Robert Casey, D-Pa., wrote. “This action would be a direct insult to taxpayers who have contributed $170 billion to avert this collapse and are now the company’s owners.”
The AIG bonus scandal is beginning to take a toll on the Obama administration, as the anger on Main Street is directed to 1600 Pennsylvania Ave. The White House attempted to calm populist passions by expressing outrage at the misuse of public monies, but stressing such bailouts were necessary to revive the economy.
Mr. Obama has long criticized excessive bonuses, but his administration did little to prevent the scandal on the front end. Rather than trying to stop AIG from receiving an additional $30 billion in loans last month, or at least placing conditions on the loan, Mr. Obama waited until news of the bonuses dominated news coverage for two days to respond.
The outrage started to dampen Mr. Obama’s polls as a CNN/Opinion Research poll found 54 percent of Americans back his stimulus plan, a 6-point drop from February.
“Spending government money is growing less and less popular as time goes on, but it comes as no surprise that Democrats and Republicans have different views on that matter,” said CNN Polling Director Keating Holland said in a statement posted to the news organization’s Web site. “Democrats still favor the stimulus bill and Republicans continue to oppose it. Independents are now evenly divided — 48 percent favor it and 50 percent oppose.”
Joe Murray can be reached at jmurray@thebulletin.us
It is shaking the newly poured foundation of the Obama administration and sending a prominent Connecticut lawmaker scrambling.
On Monday, the White House tried to quell public outrage over the scandal, but it stumbled out of the gate, as press secretary Robert Gibbs could only tell the press government lawyers were “looking through contracts to see what can be done to wrest these bonuses from their recipients.”
But news of the bonuses put added pressure on the back of U.S. Sen. Chris Dodd, D-Conn., who was responsible for crafting an amendment to the $787 billion stimulus package that restricted executive compensation, but provided for an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009.” The AIG bonuses would fall under such an exception.
Mr. Dodd, who is facing a tough re-election campaign in 2010, was the largest beneficiary of campaign cash in the 2008 election cycle. Mr. Dodd received $103,000 from AIG, while Mr. Obama came in a close second at $101,332. Mr. Dodd’s office was quick to shoot down allegations of foul play.
A spokesman for Mr. Dodd told Fox News the lawmaker “was completely unaware of these AIG bonuses until he learned of them in the past few days; to suggest that the bonuses affecting AIG had any effect on Sen. Dodd’s action is categorically false.”
In response to the scandal, lawmakers began floating the idea of taxing the AIG bonuses to recoup some of the money the government has paid to AIG. Senate Majority Leader Harry Reid, D-Nev., took to the Senate floor yesterday and promised legislation addressing the issue would be presented within hours.
“Remember, we as a Congress are not defenseless,” Mr. Reid said. “We can also do things.”
He added, “Recipients of these bonuses will not be able to keep all of their money. And that’s an understatement.”
House Speaker Nancy Pelosi, D-Calif., spent yesterday afternoon rolling out legislation that would broaden the attorney general’s powers to recover the bonus money. Mrs. Pelosi had ordered three House committees to produce legislation and hoped for a vote sometime next week.
“We have repeatedly called on executives at corporations that have taken our financial system to the brink of collapse with irresponsible business practices to return their bonuses and other financial rewards,” Mrs. Pelosi said. “Most appallingly, while millions of Americans struggle through this economy, those who have received the largest measure of taxpayer assistance from the Treasury Department have shown no restraint.”
Republicans, who long argued against the bailouts, made it a point to show Democrats the error of their ways.
“Wouldn’t the Treasury and the taxpayer have had more leverage over AIG’s executive contracts before providing another $30 billion in taxpayer money rather than allowing the bonuses to be paid with taxpayer money?” asked Senate Minority Leader Mitch McConnell, R-Ky.
A number of lawmakers attempted to appeal to the conscience of the AIG executives and asked for them to return the money.
“It is unquestionable however that payment of these bonuses would lavishly reward some of the very individuals responsible for the near collapse of AIG,” Sen. Robert Casey, D-Pa., wrote. “This action would be a direct insult to taxpayers who have contributed $170 billion to avert this collapse and are now the company’s owners.”
The AIG bonus scandal is beginning to take a toll on the Obama administration, as the anger on Main Street is directed to 1600 Pennsylvania Ave. The White House attempted to calm populist passions by expressing outrage at the misuse of public monies, but stressing such bailouts were necessary to revive the economy.
Mr. Obama has long criticized excessive bonuses, but his administration did little to prevent the scandal on the front end. Rather than trying to stop AIG from receiving an additional $30 billion in loans last month, or at least placing conditions on the loan, Mr. Obama waited until news of the bonuses dominated news coverage for two days to respond.
The outrage started to dampen Mr. Obama’s polls as a CNN/Opinion Research poll found 54 percent of Americans back his stimulus plan, a 6-point drop from February.
“Spending government money is growing less and less popular as time goes on, but it comes as no surprise that Democrats and Republicans have different views on that matter,” said CNN Polling Director Keating Holland said in a statement posted to the news organization’s Web site. “Democrats still favor the stimulus bill and Republicans continue to oppose it. Independents are now evenly divided — 48 percent favor it and 50 percent oppose.”
Joe Murray can be reached at jmurray@thebulletin.us
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