After AIG announced its plans to pay $100 million in expedited bonuses this year, Treasury Secretary Tim Geithner criticized the payouts as "outrageous" and urged Congress to recover the funds with President Obama's proposed bank fee.
Appearing before the House Ways and Means Committee, Geithner called the bonuses, which will be paid to 200 employees in the company's financial products division, an "outrageous failure of policy." But he suggested that taxpayers could recoup the money with the bank fee outlined by the White House in its 2011 budget. The fee, which would be collected from the financial industry's largest firms, is expected to raise $90 billion over ten years. Here's Geithner:
"Now, if you join with us in passing this proposed fee on our largest financial institutions... you'll be able to say that the American taxpayer will not pay a penny for what happened at AIG," he said.
At the Senate Finance Committee, Iowa Senator Chuck Grassley noted that AIG executives pledged to return $45 billion of the company's 2009 $168 million bonus pool last year -- but never did. Instead, the troubled insurance giant moved to pay out $198 million in bonuses this year, and agreed to revise the number down only on condition that they be distributed early. AIG "has taxpayers over a barrel," concluded Grassley:
"The Obama administration has been outmaneuvered. And the closed-door negotiations just add to the skepticism that the taxpayers will ever get the upper hand."
But pay czar Kenneth Feinberg defended the administration: "We are not being outmaneuvered," he said. "These AIG bonuses were signed into law years ago."
"What I'm trying to do now is maximize whatever leverage we have to get as much of that money back and - to use Senator Grassley's word - to maneuver AIG to pay back what it said it would pay back."
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