With voters and politicians consumed by populist outrage at his company’s $165 million in bonuses, AIG CEO Edward Liddy acknowledged a “high point of public anger,” saying he found the payouts “distasteful.”
In an effort to quell the uprising against AIG, Liddy told a House committee Wednesday afternoon he had asked employees who received bonuses over $100,000 to return half of that money, and some executives had already volunteered to return 100 percent of their payouts.
“We will work to ensure the highest level of employee participation in this effort in the days ahead,” Liddy promised.
Yet in prepared testimony to a House Financial Services subcommittee, Liddy also claimed that the bonus payments were necessary to maximize AIG’s ability to pay back the government some of the $180 billion in bailout funds the company has received.
“We have to continue managing our business as a business — taking account of the cold realities of competition for customers, for revenues and for employees,” Liddy said in testimony. “Because of this, and because of certain legal obligations, AIG has recently made a set of compensation payments, some of which I find distasteful.”
But contractual obligations and distasteful feelings are getting Liddy nowhere with angry politicians today, who are using the nationally televised hearing to one up one another with rhetoric about greed and outrage.
Rep. Paul Hodes (D-N.H.) made the first headline-worthy statement, saying AIG stands for “Arrogance. Incompetence. Greed.”
President Barack Obama, in brief remarks on the White House lawn before taking off for a trip to California, blasted the bonuses and the "culture" of "excess greed and excess risk-taking.”
The AIG bonus controversy has, over the past 48 hours, completely consumed Washington, drowning out virtually everything else.
At a routine House vote this morning on a non-controversial public service bill, Republicans crafted a procedural measure that forced lawmakers to take sides on the GOP proposal for AIG, which would direct Treasury Secretary Timothy Geithner to recover the bonuses. Democrats voted no on the issue, since it was merely a procedural vote unrelated to AIG, but Republicans set this vote up as a way to blast Democrats for not doing more to take back the bonuses.
The Obama administration is still scrambling to get its footing to figure out how to respond, but most of its actions have been backward looking, releasing timelines about who knew what when on the bonuses. Both chambers of Congress are trying to fast track legislation that would essentially tax the all bonuses for bailout recipients — not just AIG — but it’s not clear if these bills will get much support from Republicans who vow never to vote for a tax increase.
"We're moving forward to put a substantial tax on the bonus part of those finance companies that have received TARP benefits,” said Ways and Means Chairman Charles B. Rangel (D-N.Y.).
Obama stopped short of embracing a legislative solution, but said he supported “A resolution authority that would be similar ... to the authority the FDIC currently has over banks.”
Several Democrats in Congress are under fire — especially Sen. Chris Dodd (D-Conn.), the powerful chairman of the Banking Committee — because he authorized language in the $787 billion stimulus that made the AIG bonuses possible.
“Today, news reports reveal that a last minute provision in the stimulus bill inserted by Democrats protected bonuses like those received by AIG executives,” said House Minority Whip Eric Cantor (R-Va.). “Taxpayers deserve better than this from their government, and this is just the latest reason why legislation must be transparent for all Americans to see before t is recklessly signed into law.”
At the Financial Services subcommittee hearing, Republicans on the committee are using their opening statements to link AIG’s greed to the Obama administration.
Several Republican questioned why Treasury Secretary Tim Geithner failed to prevent the bonuses from being distributed last week. Republicans have been slamming Geithner and the administration all week. Rep. Connie Mack (R-Fla.) became the first member of Congress to call on Geithner to resign.
Rep. Barney Frank, chairman of the House Financial Services Committee, shot back at Republicans, pointing out that they, too, failed to ask Federal Reserve Chairman Ben Bernanke the hard questions at a hearing last July.
Frank then trained his fire on Liddy, demanding that he submit the names of people who received bonuses. That was when Liddy decided it was time to push back, saying he feared for his employees’ safety if their names were leaked to the public. Liddy proceeded to read off a series of threats that had been sent to the company, including one person who threatened to kill AIG employees with “piano wire.”
“I’m looking all the CEO’s names, kids, where they live, etc.” Liddy said.
Frank said he would first consult with security and see if there is, actually, a serious threat against AIG employees.
“If we give into these kinds of threats we’d never get information made public about a lot of things.”
Rep. Paul E. Kanjorski (D-Pa.), who is chairing the committee, tried to change the conversation.
“We did not anticipate that this hearing would get so much attention,” Kanjorski said. “It’s just a standard old committee hearing. … Maybe we can use our time up here to answer some important questions other than bonuses.”
Victoria McGrane contributed to this story.