Facebook Badge

18 March 2009

Public Outcry Forces Lawmakers to Say They’ll Recoup Millions in AIG Bonuses, But Why Not the Billions in Taxpayer Bailout Funds?

Lawmakers on Capitol Hill have responded to growing public outrage with a pledge to recoup million-dollar bonuses paid out by the bailed-out insurance giant AIG. But the hundreds of millions of dollars in bonus money pales to the billions used to bail out AIG a second time. We speak to consumer advocate Ralph Nader and economist Robert Kuttner, co-founder and co-editor of The American Prospect. Kuttner says, “I think [Treasury Secretary Timothy] Geithner is probably gone within sixty days, because he has become a liability to the administration.”

Edward Liddy, the Chief Executive of failed insurance giant American International Group, will testify before a subcommittee of the House Financial Services Committee today, as outrage continues to grow over the nearly $165 million dollars AIG paid as taxpayer-subsidized bonuses this year.

While angry lawmakers proposed legislation that would impose a special surtax on these bonuses to recoup taxpayer money, the Treasury Department announced in a letter to Congressional leaders late Tuesday that it would deduct the $165 million dollars from the government’s next infusion of $30 billion dollars of bailout funds.

Meanwhile New York State Attorney General Andrew Cuomo divulged in a letter to Massachusetts Congressman Barney Frank Tuesday that AIG paid bonuses to 418 current and former employees. This includes over a million dollars each to 73 people from a unit considered most responsible for the toxic derivatives that led to AIG’s downfall. According to the contracts obtained by Cuomo, most of the 2008 bonuses were locked in at 2007 levels last spring, despite AIG’s already declining performance at the time.

Treasury Secretary Timothy Geithner says he knew about the bonus payments only last week. In his letter to Congressional leaders he says he “strong objections” with AIG Chairman Liddy when he found out about the payments.

But reporters at the White House press briefing Tuesday asked why Secretary Geithner and President Obama did not have this information earlier or act sooner considering the company is 80 percent owned by the government.

I’m joined now by two guests. Ralph Nader is a longtime consumer activist, corporate critic, and former presidential candidate, joining me on the telephone. Economist and journalist Robert Kuttner joins us from Boston. He’s the co-founder and co-editor of The American Prospect and a distinguished senior fellow at the think tank Demos.

Robert Kuttner, Journalist and economist. He is the co-founder and co-editor of The American Prospect magazine, as well as a Distinguished Senior Fellow of the think tank Demos. His latest book is called Obama’s Challenge: America’s Economic Crisis and the Power of a Transformative Presidency. Kuttner’s previous works include The Squandering of America: How the Failure of Our Politics Undermines Our Prosperity.

Ralph Nader, longtime consumer advocate, corporate critic and former presidential candidate.

1 comment: