Anger Over AIG Depletes Obama's Capital

Washington Post: Firm Received Billions From U.S.; Now Issues Bonuses, And White House Can't Stop Them

(Washingtonpost.com)  This story was written by Washington Post Staff Writers Michael D. Shear and Paul Kane; staff writers Michael A. Fletcher and Scott Wilson contributed to this report.

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President Obama's apparent inability to block executive bonuses at insurance giant AIG has dealt a sharp blow to his young administration and is threatening to derail both public and congressional support for his ambitious political agenda.

Politicians in both parties flocked to express outrage over $165 million in bonuses paid out to executives at the company, demanding answers from the president and swamping yesterday's rollout of his efforts to spark lending to small businesses.

The populist anger at the executives who ran their firms into the ground is increasingly blowing back on Obama, whom aides yesterday described as having little recourse in the face of legal contracts that guaranteed those bonuses.

White House press secretary Robert Gibbs, peppered with questions about why the president had not done more to block the bonuses at a company that has received $170 billion in taxpayer funds, struggled for an answer yesterday afternoon. He explained that government lawyers are "looking through contracts to see what can be done to wrest these bonuses from their recipients."

Obama himself sought to channel the public's sense of disbelief yesterday. "How do they justify this outrage to the taxpayers who are keeping the company afloat?" he said, declaring the bonuses an "outrage" that violate "fundamental values."

White House aides grasped for actions that could soothe sentiment on Main Street and in the halls of Congress, where the fate of the new president's sweeping agendas on health care, climate change and education will be decided. They suggested that the government will use its latest pledged installment of $30 billion for the ailing company to recover the millions in bonuses paid Friday.

But the damage control did not seem to satisfy incredulous lawmakers in both parties, who said the image of financial executives taking huge bonuses from a taxpayer-funded rescue puts the president in a politically impossible position.

"I warned them this would be met with an unprecedented level of outrage," Sen. Christopher J. Dodd (D-Conn.), the chairman of the banking committee and part of a group of senators who pressed Treasury Secretary Timothy F. Geithner to stop the bonuses, said yesterday.

House Minority Leader John A. Boehner (R-Ohio) said the bonus issue added to his belief that there will be almost no Republican support for any expansion of a bank-bailout program that passed Congress last fall with broad bipartisan support.

"What is the government's exit strategy from this sweeping involvement in private business?" he asked in a statement, adding that "taxpayers are not receiving an adequate accounting from either the Treasury or the management of the companies that received taxpayer funds. Unfortunately, we have not yet seen such a plan."

The rhetoric grew so heated yesterday that Sen. Charles E. Grassley (R-Iowa) suggested in a radio interview that AIG executives ought to "follow the Japanese model ... resign, or go commit suicide." An aide later explained he does not actually want executives to kill themselves.

More than 80 House Democrats signed a letter demanding that the money used to pay the bonuses be recouped from AIG. New York Attorney General Andrew M. Cuomo announced that he will subpoena the Manhattan-based company, seeking data documenting who received the bonuses and the justification for them.

"You could argue that if taxpayers hadn't bailed out AIG, the contracts wouldn't be worth the paper they were signed on," Cuomo said.

The Obama administration was already facing a skeptical public and members of Congress critical of the huge sums of money the government has allocated to shoring up the devastated financial system.

News of the latest AIG bonuses only compounded the political problems that the huge expenditures pose for the president. The administration has tried to manage the public anger by expressing empathy with the outrage over the large outlays to financial firms, while explaining that they are necessary to stabilize the economy.

Earlier this month, the administration added to the bailout money needed to keep AIG functioning, saying failure of the company would be disastrous for the larger economy. And the administration is all but certain to return to Congress for hundreds of billions of dollars more to aid the financial system.

But the bonus issue, in particular, is hounding Obama as he pursues his larger goals, in part because of the president's own repeated declarations of outrage - offered again yesterday - aimed especially at the firms that are feeding at the public trough.

In February, Obama announced tough new restrictions on executive compensation that promised an end to massive salaries for executives of failing companies. Similar rules were eventually written into legislation and hailed as evidence that executive compensation would be checked.

But reports about the latest AIG bonuses quickly undermined whatever political capital Obama has earned with his past efforts.

Over the weekend, White House officials expressed outrage at the bonuses paid out by AIG but said there was nothing they could do to stop them. After news of the bonuses dominated news coverage for two days, the administration took a newly aggressive stance.

Asked why the administration is attempting to claw back the bonuses now but did not do more to block the payments earlier this month when it was authorizing the latest $30 billion in new loans to the struggling insurer, Gibbs was unresponsive.

"The administration is taking the steps today to go back and see what can be done," he said.

[sjc_1]

It is depleting U.S. capital too. The money going into AIG goes to banks that bought CDO bundles of sub prime mortgages. We get nothing in return. The money goes to the banks to cover the bad bets that AIG made on CDOs. This looked like insurance, but had nothing to back it.

[lambor59]

Corruption is rampant in the US, from Bush to Obama, it's no different.

[nolies74621]

AIG got this money on the Bush watch, you remember that presidency that


we got attacked on, that started the war to nowhere, and that ruined the American


economy and turned the United States into a third world country,


republiCON's are Nazi Fascists
Posted by pythoncharly at 6:15 PM : Mar 17, 2009


OK so who is responsible for the oversight on AIG spending of TARP funds now? Bush? no he is in Texas. These bonuses were given out under the new administrations watch, maybe a blind eye was turned in hopes that it would'nt come to light as well as the campaign funds that Obama received from AIG as a Senator.

[bumpedoff]

Bush the spending fool obama a bigger spending fool

[butterfly462]

Obama feigns outrage while the White House staff waits on him and his family hand and foot, he has no mortgage to pay on his new diggs, the chefs prepare whatever he wants, no airfaire to pay, no utility costs, while he rapes and pillages America.
Posted by joule18 at 7:25 PM : Mar 17, 2009

OMG. And this has been going on for how long? How come I didn't know this? So you're saying That President Bush payed his own way during his term?
What an iditoic comment joule 18, You do know that every President gets those things don't you? Were you expecting us all to be ouraged that President Obama gets to live in the White House, has waitstaff, has a chef, flys on air force one, and doesn't pay for the utilities at the White House. All of America now knows you are an idiot.

[butterfly462]

Over 80% of the Americans were against this whole TARP legislation, but did the DumboCraps who control of Congress listen to the American People? No, they never do!
Posted by scb1111_1 at 10:05 AM : Mar 17, 200

The Democrats did not control congress. Same number of Dems & Repubs in Senate. In the House there was a majority but not a veto proof majority therefore any legislation put forth by the Dems. could be vetoed by Bush and it all stoped there. Do you think or research much?

[butterfly462]

If the Republicans know so damn much how is this country in such a mess it did not get this way in two months
Posted by aheadace at 9:30 AM : Mar 17, 2009

The downturn started about two years ago! What happen? Oh, that's right, the DumboCraps took control of Congress in 2007 and Barack Obama started talking this economy down during his whole campaign of two years?
Posted by scb1111_1 at 9:38 AM : Mar 17, 2009

Awwww. You really don't know that you don't know stuff do you?
110TH Congress(the one during the last 2 years of Bush's 2nd term)
Senate
49 Dem
49 Repub
2 Ind.
Anybody see a Dem. majority here. No Dem. control here
House
233 Dem
202 Repub
Yes, I see a Dem. majority. Thing is, any legislation needs a vote of 290 to be a veto proof majority vote. I don't see 290 Dems., Do you? Any legislation had to have Republicans on board. At no time during the 110th Congress could the Democrats pass anything by themselves. This means that there was no Democrat controlled Congress during all 8 years of the Bush administration.
TOTAL Republican control of the government for 8 years!!!!!!!! Got it.

[bumpedoff]

11 trillion in debt and it's spend spend and spend some more.

[joule18]

Obama feigns outrage while the White House staff waits on him and his family hand and foot, he has no mortgage to pay on his new diggs, the chefs prepare whatever he wants, no airfaire to pay, no utility costs, while he rapes and pillages America.

[lami987]

We need the media to reveal whether or not Sen. Dodd added the amendment to the stimulus bill to exempt contractually obligated bonuses paid to company executives. If he indeed did that I suggest we vote him out of office next time around. US executives are by far the highest paid in the world we must tell our government that enough is enough. Actually many US workers need higher pay not the executives.

[jmiller80130]

The AIG argument that bonuses are necessary to keep top talent doesn't hold water. What does a resume' look like with a work history of AIG executive in their financial products division look like? Oh, wait. I was assuming that banking and financial companies are honest. These executive that quit might be snapped up right away because of their inherent industry knowledge.

[bumpedoff]

obamanation own's AIG.

[SJC1701]

You people are nuts or have bad memories, this AIG bail out occurred under BUSH, Obama and his group inherited this F____ mess.

at least get your facts straight.

[____One_American___]

While the Democrats pretend to be outraged by the AIG bonuses - we find that the Democrat Chris Dodd was responsible for AIG bonuses protected under a very recent law that the Democrats just passed:

******
Senator Chris Dodd (D-Conn.) on Monday night floated the idea of taxing American International Group (AIG: 0.95, 0.1699, 21.78%) bonus recipients so the government could recoup some or all of the $450 million the company is paying to employees in its financial products unit. Within hours, the idea spread to both houses of Congress, with lawmakers proposing an AIG bonus tax.

The move represents somewhat of an about-face for the senator.

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.

The amendment 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.

A spokesperson for Senator Dodd said the senator "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 Senator Dodd's action is categorically false."

One of AIG Financial Products' largest offices is based in Connecticut.
*****

Do you have any doubts now about just how slimy the Obama administration and the Democrats are?

[pensacola8-2009]

Since the bailout was made without stings attached, AIG can legally keep the money and distribute it as they intended.

Creating a tax to collect the bonus money back, would violate the US Federal Constitution. Article 1 section 9 & 10 describe such event as "Ex Post Facto" and restrict federal and state laws from being passed retroactively or to criminalize action after the event occurred.

The country has to be very careful how it sets itself up for traps that it falls into. First we are good hearted and come to aid or provide assistance, then something happens and we loose our cheerfulness. Then someone comes to us for assistance again, and then we become rude, nasty and say "No", only to learn we just slashed our own throat because of prejudice.

The country must avoid acquiring prejudice over the AIG affair. We have to become stronger without the prejudice and legislate for the best interests of the country. We won't hit the target everytime. We will miss on our first try more often than on our successive efforts and tries. Weariness and fear should never be present in a negotiation.

The USA has a good record for hitting more targets than it misses. The world still loves us despite our errors and imperfections, because we find to way to accept and love ourselves as humans, not perfect humans.

[homespunlady]

Aside from AIG "sponsoring" the Manchester United sports team, Knowing full well they were in deep doodoo at LEAST as far back as early to mid 2008 and many of the NAMES that people are screaming for the 10k FINANCIAL STATEMENT of this HYDRA provides a rambling SCHEDULE of WHAT THEY DID and WHEN.

Interesting reading that can be found at:

http://media.corporate-ir.net/media_files/irol/76/76115/123108_10K_final.pdf

[homespunlady]

Aside from AIG "sponsoring" the Manchester United sports team, Knowing full well they were in deep doodoo at LEAST as far back as early to mid 2008 and many of the NAMES that people are screaming for the 10k FINANCIAL STATEMENT of this HYDRA provides a rambling SCHEDULE of WHAT THEY DID and WHEN.

Interesting reading that can be found at:

http://media.corporate-ir.net/media_files/irol/76/76115/123108_10K_final.pdf

[quapawsix]

We got the best system money can buy

[stevador39]

Obama and Geithner are doing whatever they can get away with. Obama has suggested that the regulation of the financial industry be turned over the the Federal Reserve Board. That's the fox guarding the hen house.

[jogger5079]

http://www.opensecrets.org/orgs/toprecips.php?id=D000000123

Dodd and NoBama EACH took over $100,000 in contributions from AIG last year. Hmm.....and the plot thickens!

Obama="empty suit with no substance!"