Romer: "We're Pursuing Every Legal Means" To Undo AIG Bonuses

A growing bipartisan chorus of lawmakers is condemning insurance giant AIG for deciding to pay out $165 million in bonuses despite receiving $170 billion in taxpayer bailout funds and some are demanding that AIG renounce the bonuses - or else.

Senator Russ Feingold sent a letter to Treasury Secretary Timothy Geithner, urging the Obama administration to explore "legal options" to prevent the millions in AIG payouts, reports CNN.

"I write to ask why any bonuses would be legally required, given the company's abysmal performance," says Feingold, D-Wisconsin.

Feingold asked whether the bonuses could be canceled or recouped from recipients, and whether the administration will sue AIG executives for breaching their duties to shareholders

And some Obama administration officials seem amenable to that position.

Christina Romer, chair of the White House Council of Economic Advisers, told NBC's "Meet the Press":

"Can I say, we're -- we're the first people to be angry. So absolutely Secretary Geithner has been furious and has been pushing back, urging them to renegotiate this. We're pursuing every legal means to deal with it."

House Speaker Nancy Pelosi issued a written statement calling the pay-outs "unconscionable" and said Congress would seek to "recover taxpayer funds of companies that abuse the privilege of taxpayer assistance," reports Fox News

"I call upon the executives at AIG to right the wrong they have done to American taxpayers, who are footing the bill for the most expensive government rescue in history. They should renounce the bonuses and refuse the excessive retention pay they previously agreed to," Pelosi said.

Rep. Elijah Cummings, D-Md., also released a written statement Sunday calling on AIG Chairman Edward Liddy to step down.

And Rep. Barney Frank, the chair of the House Financial Services Committee, said it was "wrong" on Fox News. "This is an example of people at the commanding heights of the economy misbehaving, abusing the system."

GOP leaders, such as Mitch McConnell, also criticized the payouts.

"It is an outrageous situation," said Sen. Minority Leader Mitch McConnell on ABC. "If you are going to take the government as a partner, the message to any business out there...is 'lets enter into a bunch of contracts real quick and we'll have the taxpayers pay bonuses to our employees.' This is an outrage."

As Huffington Post's Sam Stein reported earlier today, some administration officials say that while they "shared such populist indignation, they insisted that on this front their hands were tied."

Larry Summers, chairman of the White House National Economic Council, appearing on ABC's This Week, said the Obama administration was largely powerless to stop the cash rewards. "We are a country of law. There are contracts. The government cannot just abrogate contracts. Every legal step possible to limit those bonuses is being taken by Secretary Geithner and by the Federal Reserve system."

Comments

[antirepublocrat]

I've been hearing a lot of hand-wringing from the punditry: How do we do this legally? Won't it be a bill of attainder? What about the sanctity of contracts? What about those who only got a few thousand? Why punish AIG only, what about Merrill Lynch? Etc, etc.

There's a solution to all of the above. The marginal tax rate at the end of the Eisenhower administration was 90%, a period of enormous prosperity, so those marginal rates obviously didn't stifle US economic growth. And it's true, the Wall Street CEOs are not really much worse than other corporate CEOs. Why should corporate executives in the US earn millions for destroying our economy through off-shoring? We need to reintroduce steeply graduated tax rates, indexed for inflation, with a top rate of 90% for incomes over $1 million in today's dollars, with no tax preference for capital gains and dividends.

To a large extent, these obscene executive salaries are just a score-keeping device. It reminds me of when I was a kid. We modified the rules of our Monopoly game to allow players to "make deposits" and "borrow" from the bank beyond their property's mortgage value. The game could go on forever, with the "winner" becoming ever wealthier. My brother bragged about his record-breaking wealth, but it was just a number. Who can really spend that much money? But we were just kids and the loser didn't have to sleep on the street.

[AN2009]

Well said.

[Senseimilla]

"Secretary Geithner has been furious and has been pushing back, urging them to renegotiate this"

How is "urging" someone to "renegotiate" something a "furious" action?

[crazylikeafox]

Jail should settle the score.

[AN2009]

Draft these executives and make them serve in Afghanistan!

[vandegrasse]

The "welfare mom" companies and their sugar Daddy government are playing a dangerous game here! The citizens are losing TRUST in both ot them and that spells disaster for everyone. Examples must be set, fights against this corruption at high levels must be fought or the country is going down. What would happen if no one their taxes or their bills. Disaster. Obama needs to take center stage and behave more like Roosavelt and condemn these people then sick every public prosecutor on them like there's no tomorrow, because guess what? There might not be. Trust makes government and economic engine's run. The Trust is evaporating as we speak!

[chc2001]

so nice of the government to pay lip service as they bend us over. beyond foul on all parts.
as of this minute, i am sorry i voted for obama.
and barney frank should be impeached.
and geithner should never have been appointed to begin with.

they cant do anything? puh-leaze.

[rhubardpi]

Phooey with legal....send a few of the boys from the 101st Airborne into AIG to tweak a few noses out of shape on anyone who insists on their bonus.......

[catzoned]

Well, finally a subject that Democrats, Republicans, and the taxpayers can agree on!

[balickistan]

who is that dude romer? did he come from the board or as ceo of one of these f@#king banks? they say that they are angry each day that these things are revealed, yet everyday has a new "scandal." either romer and his buddies don't care, or they are the dumbest people in the room.

[rosiebond007]

WITHOLD THE BAILOUT MONEY

[curiouser01]

Obama can publicy ask the bonus receiving AIG executives, by name, to do their patriotic duty and refuse this and future bonuses until the taxpayer loan is repayed in full. During national crises, citizens know we must go without to serve the greater good (WWII for example). It is not just a duty, it is an honor to do so. Let's identify the dishonorable.

[catzoned]

Agreed. Let's start with a list of American corporations who moved their businesses overseas to further their corporate profiteering, like America Online. Isn't it their patriotic duty to move back home and employ Americans again? I'd like these companies identified.

[lb458]

Larry Summers needs to go if he thinks that the government cannot abrogate the contracts. It is the taxpayers money that is paying the bonuses for goodness sakes! It is past time for the Administration to take a hard line with these corrupt financial executives and businesses that are getting taxpayer bailouts. They need to return the money or not payout on the bonuses.

[ObjectiveRealist]

It's not a "chorus" -- and the implication that the agreement results from *rehearsal* or coordinating is offensive -- it is a growing bipartisan _consensus_ that failure does not warrant a bonus, it warrants a pay cut or termination of employment. We want to treat Wall Street as it's treated us and since we now own that company that is how it is going to be.

"A growing bipartisan chorus of lawmakers are condemning insurance giant AIG for deciding to pay out $165 million in bonuses despite receiving $170 billion in taxpayer bailout funds and some are demanding that AIG renounce the bonuses - or else."

Bah! You have better writers than Baram already. In addition to the thinly-veiled corporatism evident from his sarcastic word choice, his grammar is poor. One chorus takes a singular verb, such as "is." Baram used "are," incorrectly. A chorus has many members, but is still one chorus, a singular chorus. The modifying clause "of lawmakers," tells about the chorus or the members of _it_, but the subject of the sentence, "chorus," with which the verb is grammatically required to agree, is still one "chorus" not "choruses" (chori? Maybe, but I doubt it.).

He can't make his nouns and his verbs correctly agree in number in his writing _for_publication_ plus his word choice annoys me. I wish this site was half as Liberal as the right-wing echo chamber portrays it. Still, my favorite of all the Inter-Tubes.

[westcoastsc]

Rewarding failure is counter to the definition of a bonus and all contracts that do this for an employee, even by any other name, should be nullified for this reason. They are all executives and should not have done anything to damage the company that would put their bonuses at risk, such as taking bonuses that damage the health of a whole company in order to reward themselves by what should be considered nothing less than thievery. How is it that the people running the company are continually allowed to loot the company?

[westcoastsc]

And what does it do for the strength of American companies?

[huffingt]

Give me back my mone y.
Fools don't get to be rewarded.
America get mad with AIG. Get our money back from these thugs.
Name and shame them.

[westcoastsc]

Awarding bonuses for failure is counter to the definition of a bonus, and all contracts requiring a bonus amidst failure should be nullified for this reason.