Proposal will require AIG to pay back bonuses

WASHINGTON – Senate Democratic Leader Harry Reid said yesterday Congress will force executives of American International Group to pay back at least some of the $165 million in bonuses they received after the insurance giant got billions in federal bailout money. Reid, said that Senate Finance Committee Chairman Max Baucus will issue a proposal in the next day or so that would force AIG to return some of the money awarded to executives who oversaw its failure. As outrage over the bonuses reached a new crescendo across the political spectrum, the Obama administration said it was trying to put limits on how’ government bailout dollars can be used. But questions have been raised about what the administration knew about the bonuses – and when. Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee, chastised the administration earlier yesterday, saying Treasury Secretary Timothy Geithner should have blocked the payouts. Shelby charged that Geithner either knew or should have known about the bonuses. ‘We need to know, what are the details of this? When were the bonuses signed up? Who’s getting it?’ Shelby said. The Alabama senator stopped short of calling for Geithner’s resignation, but said, ‘He’s under fire from all sides now.’ ‘I don’t know if he should resign over this,’ Shelby said. ‘He works for the president of the United States. But I can tell you, this is just another example of where he seems to be out of the loop. Treasury should have let the American people know about this.’ AIG was predictably raked over the coals at a banking committee hearing on regulating the insurance industry. ‘One way or another, we’re going to try to figure out how to get these resources back,’ said Christopher Dodd, D-Conn., the panel’s chairman. ‘This is ridiculous,’ exclaimed Sen. Jon Tester, D-Mont. He said AIG executives ‘need to understand that the only reason they even have a job is because of the taxpayers.’ Edward Liddy, the CEO of American International Group Inc., is scheduled to testify tomorrow before a House subcommittee. On Monday, President Obama lambasted the insurance giant for ‘recklessness and greed’ and pledged to try to block payment of the bonuses. Obama said he had directed Geithner to determine whether there was any way to retrieve or stop the bonus money – a move designed as much for public relations as for public policy. ‘I mean, how do they justify this outrage to the taxpayers who are keeping the company afloat?’ Obama demanded. The financial bailout program remains politically unpopular and has been a drag on Obama’s new presidency, even though the plan began under his predecessor, President George W. Bush. The White House is aware of the nation’s bailout fatigue; hundreds of billions of taxpayer dollars have gone to prop up financial institutions that made poor decisions, while many others who have done no wrong have paid the price. Sen. Charles Grassley suggested in an Iowa City radio interview on Monday that AIG executives should take a Japanese approach toward accepting responsibility for the collapse of the insurance giant by resigning or killing themselves. ‘Obviously, maybe they ought to be removed,’ the Iowa Republican said. ‘But I would suggest the first thing that would make me feel a little bit better toward them if they’d follow the Japanese example and come before the American people and take that deep bow and say, I’m sorry, and then either do one of two things: resign or go commit suicide.’ Grassley spokesman Casey Mills said the senator wasn’t calling for AIG executives to kill themselves, but said those who accept tax dollars and spend them on travel do so irresponsibly. New York Attorney General Andrew Cuomo said he has issued subpoenas for the names of AIG employees given bonuses despite their possible roles in its near-collapse. Cuomo said his office will investigate whether the bonus payments are fraudulent under state law because they were promised when the company knew it wouldn’t have the money to cover them. AIG reported this month that it lost $61.7 billion in the fourth quarter of last year, the largest corporate loss in history, and it has benefited from more than $170 billion in a federal rescue.