Sen. Robert Menendez (D-N.J.) blamed Treasury Secretary Timothy Geithner for letting bailed-out insurance giant American International Group pay $165 million in bonuses to its employees, saying he wrote a letter to Geithner two weeks ago warning him of just such a possibility.
Sen. Chris Dodd (D-Conn.), tagged by Republican aides for sponsoring an amendment to the stimulus bill that allowed the bonuses, shifted the blame to the Treasury Department and “the bill conferees,” saying he had no idea that the AIG bonuses were coming.
Sen. Max Baucus (D-Mont.), joined by Sen. Chuck Grassley (R-Iowa), introduced a bill that would impose a 70 percent tax on “excessive” compensation paid to employees of all bailed-out companies. President Barack Obama has said the White House would use all legal means possible to get the bonuses back, but House Majority Leader Steny H. Hoyer (D-Md.) acknowledged that there were “some questions” as to whether Congress could do anything at all.
And while Hoyer begged AIG execs to give up the money voluntarily, Senate Majority Leader Harry Reid (D-Nev.) just tried to change the subject. Asked about Geithner’s role in failing to stop the bonuses, Reid said: “Let’s talk about what we have accomplished this Congress.”
For the second day in a row, the AIG bonuses were just about the only subject of conversation at the Capitol. At press conferences throughout the day — and as members filed in and out of a St. Patrick’s Day lunch — outrage over bonuses was on everyone’s lips.
And that suited long-suffering Republicans just fine.
“This latest flap involving AIG, I think, is very troubling,” crowed House Minority Whip Eric Cantor (R-Va.). “What’s going on in this administration? It seems like an administration in disarray.”
Having mostly opposed Obama’s stimulus plan, the second half of the Troubled Asset Relief Program funds and the omnibus spending bill, Republicans feel they have a free shot at the Democrats for anything that goes wrong now.
On Tuesday, they took it again and again. “This administration could have, and should have — through the process of providing for [AIG] another $30 billion two weeks, just two weeks, ago — prevented this from happening,” said Senate Minority Leader Mitch McConnell. “They had a lot of leverage prior to that infusion of $30 billion.”
House Minority Leader John A. Boehner (R-Ohio) said that “the American people are rightly outraged that their tax money is going to pay bonuses to the very people that got this company in trouble.”
And Rep. John Carter (R-Texas) used the bonus controversy to dredge up the ethics problems facing House Ways and Means Committee Chairman Charles B. Rangel (D-N.Y.), taking to the floor to say that Rangel solicited $10 million from the mega-insurer for his private charity.
Reid said Tuesday that Democrats would be sending a letter to AIG asking the company to renegotiate the bonuses — and that the Senate Finance Committee would act if the firm didn’t.
In the House, Speaker Nancy Pelosi (D-Calif.) directed three committees to produce an AIG bill and said the House could vote as early as this week on the legislation. She proposed giving the attorney general sweeping new powers to recover “excessive” compensation from bailout recipients.
Those plans didn’t satisfy Republicans on Capitol Hill, who accused Democrats of missing an opportunity to impose new regulations on AIG when the Treasury Department awarded it another $30 billion in government rescue funds earlier this month.
“Because the law wasn’t as strong as it could hav been doesn’t mean the Treasury couldn’t have acted,” said Sen. Susan Collins (R-Maine). “I’m disappointed they didn’t.”
Republicans singled out a last-minute amendment attached to the $787 billion stimulus bill that exempted AIG from strict executive compensation limitations.
The final version of the amendment includes an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009” — a provision that exempts the AIG bonuses Congress is now trying to recoup.
Dodd, the chairman of the Senate Banking Committee, sponsored the amendment, but his office said Tuesday that his original proposal did not include special treatment for AIG.
“Because of negotiations with the Treasury Department and the bill conferees, several modifications were made, including adding the exemption, to ensure that some bonus restrictions would be included in the final stimulus bill,” said spokeswoman Kate Szostak. “Sen. Dodd was completely unaware of these AIG bonuses until he learned of them in the past few days.”
Republican aides also complained that a provision that would have taxed bonuses for firms accepting government rescue funds was stripped from the stimulus by Democrats. The amendment would have forced AIG to pay nearly $58 million in taxes on top executive bonuses.
Sens. Ron Wyden (D-Ore.) and Olympia Snowe (R-Maine), the original sponsors of that proposal, sent a letter to Geithner on Tuesday, urging him to take a second look at their amendment.
At the White House, press secretary Robert Gibbs defended the treasury secretary and said the Obama administration was doing the best it could in trying times.
“I think what’s important most of all are the actions that were taken, the extraordinary actions that were taken to protect the American taxpayers in accordance with all that we could do,” he said.