Elijah Cummings Knew About $1 Billion in AIG Bonuses for "Months" -- Why Didn't Timothy Geithner?

Elijah Cummings shot huge holes through the stories of both Timothy Geithner and Edward Liddy yesterday during the AIG hearing on Capitol Hill.

Cummings isn't even on the House Financial Services Committee, he's on House Oversight, but he made a special request to question Liddy. Most of the attention went to subcommittee chair Paul Kanjorski, who dropped the bomb about having known of the AIG bonuses at least 4-6 weeks ago. During his testimony, Liddy confirmed that Ben Bernanke both knew about the bonuses and had approved them.

But Cummings' questions, which came late in the day, should have grabbed the headlines. In his opening question to Liddy, he said:

The media has been focused on the $165 million installment of the $450 million retention program for AIG Financial Products Division. However, for months, you and I have been going back and forth overall about the one billion dollars retention program that covers thousands of employees throughout AIG.

As Marcy Wheeler points ot this morning, Cummings then destroys Liddy's story that he was only given the "distasteful" task of paying out bonuses approved by others that he would never have allowed.  From Liddy's Dec. 5 letter to Cummings:

On September 18, 2008 AIG's compensation committee of the Board of Directors approved retention payments for 168 employees.

Liddy was very much in charge of AIG on September 18, when those retention payments were approved.

Cummings says that he met with Liddy on January 15, and at that time Liddy admitted that under his tenure, he had expanded the retention bonus program to cover 2100 employees. Cummings asked how many retention bonuses Liddy had approved, and Liddy estimated that he approved 4500 to 4700 bonuses. However, he says that number didn't include bonuses agreed to by managers of other divisions, so there were evidently more.

I was at the hearings most of the day yesterday, and I believe Cummings was the first one to ask how much money AIG had paid in bonuses in 2008 and how much was scheduled to be paid out in 2009. Liddy said he didn't know.

Let's underscore that -- Edward Liddy comes to a subcommittee hearing to answer questions about AIG bonuses, is sworn in and testifying under oath, he answers questions by every single member of the subcommittee for hours, nobody on the subcommittee asks him how much money we're talking about, and he's not prepared to answer the question when someone finally does.

The questioning of Liddy by the subcommittee yesterday was thoroughly uninformed and seemed designed to ask no serious questions. They seemed to be more interested in faux outrage, or giving Liddy a foot massage for being a great patriot working in the service of this country.

But the bottom line is -- Cummings' statements, if true, mean that many journalists have been fed a bill of goods by their "anonymous" administration sources:

Jeff Mason of Reuters says that Geithner found out about the bonuses on March 10 "according to an administration official." Yesterday Kanjorski said, "I'm sick and tired of hearing the administration and the Secretary of the Treasury say "we just found out about it." That's not true." So will Mason do the right thing and get to the bottom of it, and expose the anonymous source who lied to him if it turns out not to be true?

Massimo Calabresi now has a "scoop" in Time Magazine. He says that there's now a rift between the Treasury and the Fed, and the Fed is letting him have the goods -- namely, that the Treasury knew about the bonuses on February 28, but nobody told poor hapless Geithner.

How convenient. Geithner was lobbying heavily at the time of the stimulus bill conference for the insertion of language that made sure the AIG bonuses got paid out in full, on February 11. Which means that if he was doing so with knowledge of the existence of the bonus contracts, he was trying to make sure they got paid.   The "outrage" that caused him to reduce the total by $4.8 million before he approved them was a less than Oscar-worthy performance.

But voila! Now we hear that Geithner KNEW NOTHING and Treasury was clueless until February 28, which puts them outside the danger zone. No mention of the fact that Elijah Cummings says he knew about the bonuses for "months."

David Cho and Michael D. Shear of the Washington Post don't mention it either, when they print the official administration-dictated pushback to the Fed story:

Treasury Secretary Timothy F. Geithner, a central figure in the decision to bail out AIG last fall as president of the Federal Reserve Bank of New York, said in an interview yesterday that he had not been aware of the size of the bonuses and the timing of the payments.

"I was stunned when I learned how bad this was on Tuesday [March 10]," Geithner said. "I shouldn't have been in that position, but it's my responsibility and I accept that."

It's all just crap, of course. Elijah Cummings knew the details, Paul Kanjorski knew the details, Ben Bernanke knew (and approved) the details. Geithner either doesn't know what is going on right under his nose and is thoroughly unequal to the task of overseeing the bank bailout, or he's lying through his teeth.

Cummings' statements call into serious question the assertions being made by Edward Liddy, Timothy Geithner and sources at the Fed this morning. You could fire a cannon through the holes in the stories of Calabresi, Cho and Shear. If their job is just to mindlessly scribble whatever anyone tells them in order to preserve "access," no matter how stupid and nonsensical, they've done their job.

But many people reading these stories assume that the reporters are actually knowledgeable about what they're writing about, and have taken time to do a thorough job of research and are asking important questions. That most certainly didn't happen.

And as a side note -- when Cho and Shear had the chance to interview Geithner, they apparently didn't think it important to ask him about the deal he approved to pay out $1 billion in AIG bonuses later this year, in July and September, to employees of a company that lost $100 billion last year. Now that the President has said he is "outraged" by these bonuses, does Geithner intend to do anything about it?

If you're doing real reporting and not just taking dictation, it's a question you might think to ask.

Jane Hamsher blogs at firedoglake.com

Comments

[vesaversa1]

The real story here is with all the political posturing from both parties i think they all knew about these bonuses months ago , i am not one of those fox news views who don't understand how Washington really work and of course i was shock over the outrageous bank bonuses. But the politicians and this include president Obama also want piss in face and tell me it just raining. Enough with the finger pointing i am sick of it already i hope everyone who were elected official in congress fix this problem so this will never happen again .they're all to blame for this mess .

[joeinvt]

Why didn't Emanuel and Axelrod, Obama's chief advisors, know? Perhaps they did and are the ones who were advising Geithner.

[haimchaim]

Thanks for uncovering the dirt

[EattheRich]

There are no consequences for lying in Washington (apparently).

[Rustyredneck]

Obama and tim both knew this was happening and both tried to hide it. I believe that is considered LYING is it not ? Seems like this administration is just like slick willy"s and they can't tell the truth because it will not help there communist agenda . I frankly think that is what they are about.So glad i seen it comming and did'nt vote for this bone head.

[OliverTwist]

Anyone who was paying attention knew that executive pay was going to continue and that efforts to restrict executive dramatically had been stripped both from the TARP and later from the Stimulus.

The Washington Post wrote an articles about this in September and mid February.

The only thing that is news is the exact amount of the retention payments and the departmental distribution of payments. I guess it is a shock to find out that the payments amount to about 1 dollar out of each 1000 dollars provided in the stimulus.

Commentators and bloggers and congress members and actors - but not so much journalists who deal in actual facts - are having a ball sucking air and blowing smoke about the matter.

I guess when the individual names and amounts come out they can be outraged again!

I would love to see some comment on what is happening with the other 999 dollars out of each 1000 dollars provided in the stimulus.

Jane, in particular, has a tendency to make leaps of over simplification and unsubstantiated interpretation in evaluating the statements of people more famous than herself.

This case is a good example.

Too bad.

[webmonkey]

Totally agree.

[OldManJack2]

A glimmer of light. Some of you are starting to get it. What the administration feeds you is not truth - it's propoganda. If you thought the garbage you got fed about the bailout bonuses was bad, wait til you see what you get fed as Obama tries to ram through his next spending package. Maybe Congress has wised up enough to actually read this one before they sign it.

[mjwca]

Great blog except that why aren't you busting Cummings behind too for not coming foward during all those many months he knew about this? Everyone who has been in on the game for a good decade and more (Congress, Wall Street, the media, the SEC, etc) of falsely pumping up a sagging economy and pushing its problems down the road by fleecing investors and now taxpayers, alway seem to find their personal outrage AFTER they are sure the money is out the door. As a taxpayer, I know the big mess on all our plates is going to cost me but does it have to cost me even more because Congress is as broken as Wall Street? Do they all think this is just one more money tree like the DOD, tax breaks for the wealthy and decades of corporate welfare? They have shown us Capitalism's ugly backside time and time again yet still somehow think we should all "just trust them"? Where have I heard that one before?!

[fflambeau]

Why dump on Jane Hamsher, mjwca, when she is one of the vew people in her words, doing reporting and not dictation? Kudos (again) to the great Hamsher!

[zjr909]

Cummings has not sat idly for months just waiting for the right moment to come forward. Read Glenn Greenwald's Salon column on this same subject: Cummings has been loudly and clearly demanding an explanation of these bonuses for months. It's a case of being ahead of his time; the rest of Congress had to wait for a public uproar to even consider the matter. So there's no reason for anyone busting Cummings' behind.

[AlwaysaLiberal]

The Salon article that references Jane's? lol

[knowBuddhaU]

Busting myths even as propagandists deploy them! I love it. I bow in your virtual direction, o sister, my Sister.

Who's using the power of myth to power weapons-grade domestic propaganda for Dems?

~~~~~~~~~~~~~~~~~
Lao-Tzu: "When right Way is used by Wrong-headed, Way still works, now for wrong reasons."

[schatsie]

I read that Holbrooke was at the AIG meeting in September about the bonuses...­I would subpoena him and find out what he knew and who he told it to....

[freshnotbitter]

We shoul have declared AIG bankrupt and make good on their debts in bankruptcy court to stop a "domino effect" which was the rationale for intervening in the first place.

That way we could have put the executives in jail when they tried to skim off millions in bonuses for themselves instead of paying off debts.

[Telemachus]

Kaboom.

[steamboat]

2 things:

(1) Yes, AIG execs--- give those bonus's back !

(2) All you politicians who took contributions from AIG, give those back (see below)

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

[steamboat]

Jane, if Cummings knew about this for months, then WHY WASN"T HE (Cummings) SCREAMING back then? Why isn't the media more outraged at Dodd and Geithner and the administration?

[liveandlearn]

because the media didn't tell the whole story. liddy was brought in last september at $1 per year to clean up the aig mess. the guys whose inventive financial products caused the problem are gone. the guys who came in to clean up the $2.7 trillion mess have it down to a $1.6 trillion mess. when each of them cleans up a "book of business" to the satisfaction of the ceo and board, he earns a bonus on his way out the door. some of them finished their work before the turn of the year. others are still working. do we want to kneecap the guys who came to clean up the mess the criminals left us? i don't think so.

[OldManJack2]

Why isn't the media more outraged at Dodd and Geitner and the administration? That's an easy one. The mainstream media is not a group of news organizations, they're the propaganda arm for the radical left. They don't criticize Democrats, only Republicans. Only good news about Democrats and bad news about Republicans gets reported. If there's no bad news about Republicans to report, they make some up. It's encouraging to see that some of you are starting to understand. Listen to Rush Limbaugh for one day and get a REAL education.

[zell]

Thank you Jane for this eye-opening article. As usual, you have informed us of what is going on. I watched the hearings yesterday and stayed until the end to hear Rep Cummings question Mr. Liddy. I thought that if Rep Cummings and Rep Captor, who were not members of the Financial Subcommittee, wanted to question Mr. Liddy, then they certainly had something important to ask Mr. Liddy. I wondered why the Cable TV stations did not broadcast the hearings until the end. We are blessed to have C-SPAN 3.