Frank: Retention Bonuses Are Extortion
Retention bonuses are to a great extent extortion, Frank argued. "I think there was an element, frankly, with some — not all of them — of almost extortion, where they said, 'We know what you need to know and we will quit if you don't bribe us,'" Frank said.
He argued that there is a large pool of very talented people who have lost their jobs in the financial crisis and that AIG could replace the bonus recipients (some of whom are responsible for creating the firm's now-toxic assets) rather than bribe them with retention bonuses.
Frank said he did not agree at all with Chairman of Bank of America Kenneth Lewis' assertion that the proposed taxation of bonuses for employees of companies receiving U.S. government bailout funds could "have the potential to damage the ability of the government to engineer a financial recovery."
The congressman defended Treasury Secretary Timothy Geithner saying that he inherited an economic fiasco.
"I know some of my Republican colleagues believe in creationism in which the world started 4,004 years ago. But I don't think any of them want us to believe that it started on January 20, 2009," Frank joked, arguing that the initial loans to AIG (totaling more than $173 billion) came from the Bush administration "without any Congressional input."
More from Face The Nation (3.22.09):
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