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Home > Politics > Political Punch Political Punch Power, pop, and probings from ABC News Senior White House Correspondent Jake Tapper [IMG] Political coverage and musings on pop culture from ABC News Senior White House Correspondent Jake Tapper and the ABC News White House team. Subscribe to this blog's feed Subscribe to this blog's feed Subscribe to the Political Punch Podcast Subscribe to Jake Tapper's "Political Punch" Podcast Follow Jake on Twitter Follow Jake Tapper on Twitter RECENT POSTS * Obama Administration Transfers 12 Detainees to Yemen, Afghanistan, Somaliland * President Obama Heralds as 'Significant Progress' Unpopular Compromise Health Care Bill, Non-Binding Climate Change Accord * Obama Calls for Senate to Avoid "Parliamentary Measures" Blocking Health Care Reform * Obama Calls Global Warming Agreement an "Unprecedented Breakthrough" * A Sham" and "A Climate Crime Scene" or "A Major Step Forward"? Mixed Reactions from Environmental Groups on Copenhagen Accord * President Obama Sits for Interviews with Gloria Estefan, Will Smith, & Jada Pinkett Smith * High Drama in Copenhagen (per Administration Officials) * Treasury Plans $68 Billion in TARP Spending Next Year * Senior Administration Official Heralds "Significant Breakthrough" at Copenhagen * At Copenhagen, Chavez Suggests Obama is the Devil MONTHLY ARCHIVES * December 2009 * November 2009 * October 2009 * September 2009 * August 2009 * July 2009 * June 2009 * May 2009 * April 2009 * March 2009 December 2009 Sun Mon Tue Wed Thu Fri Sat 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 << Previous | Main | Next >> Obama Administration: We Didn't Find Out About AIG Bonuses Until This Month March 17, 2009 7:18 PM Sources in the Obama administration Tuesday said that despite previous media reports administration officials did not know until a couple weeks ago that the officials of the controversial AIG Financial Product Division were set to receive $165 million in bonuses on March 13. It wasn't until Thursday, March 5, 2009, administration sources told ABC News, that officials of the Federal Reserve Bank of New York informed officials of the Treasury Department of the full extent of the $165 million in bonuses pending for the controversial Financial Products Subsidiary. This was three days after the Obama administration had already announced a new commitment of an additional $30 billion for AIG. Treasury Secretary Tim Geithner was alerted last Tuesday, March 10; he phoned AIG CEO Edward Liddy on Wednesday evening, March 11, to protest the bonuses, sources told ABC News. On Thursday, March 12, Secretary Geithner informed a senior White House official about the controversy, aides passed the information on to President Obama later in the day. How the Obama administration was caught flat-footed by this controversy dates back to last Fall, when the New York Federal Reserve Bank -- then run by Geithner -- stepped in to give AIG a high-interest loan for $85 billion to help prevent the company from going under -- which Lehman Brothers was doing at the time. As part of the deal, AIG CEO Robert Willumstad was replaced by the new CEO, Liddy. In late October, the $700 billion Troubled Assets Relief Program passed Congress, which includes rules about executive compensation but nothing about retention bonuses. In November, the Fed and Treasury Department soon began pumping more money into AIG -- $40 billion, to take down the $85 billion credit facility set up by the Federal Reserve Bank of New York. At this point, an Obama administration official says, Treasury officials generally became aware that AIG had put retention programs in place, but whom they were for and the extent of them were unknown. The New York Fed began studying the compensation policies on the books -- while also making efforts to save banks and rescue the economy. But by then Geithner's nomination was pending and he had recused himself from dealings with AIG. AIG provided information about the company's myriad compensation packages to the New York Fed, but officials described the information as extremely complex and not easily understood. AIG had more than 100 compensation policies for more than 116,000 employees throughout the world. In January and February, officials of the Federal Reserve Board, and the Federal Reserve Bank of New York began working on an additional $30 billion support package to prevent an AIG downgrade. On February 23 and 24, government officials were finalizing the details of the USG support package for AIG; on February 25 and 26, officials of AIG presented the package to the rating agencies, along with the Federal Reserve Bank of New York. On February 27, the agencies affirmed AIG's A- rating. It was only after that process, on February 28, officials said, when officials of the Federal Reserve Bank of New York email their counterparts at the Treasury Department to inform them of several outstanding issues related to compensation for AIG executives, and to give them a heads up that details of the retention program for the Financial Products subsidiary were forthcoming. On March 2, AIG officials announced record losses for their company, along with the restructuring plans and additional $30 billion in government aid. Three days later, on March 5, New York Fed officials forwarded to the Treasury Department a summary of AIG's bonus and retention payment issues, including details of the retention program for officials of the Financial Products. This information included that $165 million in payments were expected that very month, as well as the fact that the contracts were in place in the first quarter of 2008, and so not covered by the limitations in the stimulus bill as articulated by an amendment to the stimulus bill offered by Sen. Chris Dodd, D-Conn. As ABC News' Capitol Hill Correspondent Jonathan Karl reported, in February, the Senate unanimously approved an amendment restricting bonuses over $100,000 at any company receiving federal bailout funds, but during the closed-door House and Senate negotiations the provision was stripped out and replaced with a measure by Dodd exempting bonuses agreed to prior to the passage of the stimulus bill on February 11, 2009. On March 9, 2009, the Federal Reserve Bank of New York sent full details and supporting documentation to the Treasury Department about the Financial Products retention program. One day later, Geithner was told about the $165 million in bonuses. "Everyone knew that there were retention bonuses on the books," an Obama administration source said, "but no one (in the Obama administration) knew about the $165 million for the Financial Products division" until March 5. Geithner called Liddy on Wednesday, March 11, Liddy -- appointed to run AIG September 2008 -- told the Treasury Secretary that he knew about the bonuses and had already talked to company lawyers to try to end them. But, Liddy said, he'd been told that going after the bonuses -- for work from 2008 -- would actually cost the government more money because of resulting lawsuits. The Treasury Secretary expressed concern, pointed out that AIG also had 2009 retention bonuses set up, not to mention $121.5 million in executive bonuses that Geithner wanted trimmed. On Thursday and Friday, administration sources said, Geithner urged Treasury Department lawyers to try to figure out a way to block the bonuses. But the lawyers ultimately came to agree with AIG's lawyers; that their hands were tied. Liddy and Geithner talked again on Friday, the day the $165 million in retention bonuses were being cut, and the Treasury Secretary Geithner acknowledged he did didn't think he could block the payments going out the door. But he told Liddy he was going to make efforts to, at a minimum, recoup that money as part of the agreement for the pending $30 billion the government announced in aid for AIG on March 2. Liddy agreed to trim or reduce executive compensation for the top 47 officers of the company, to reduce and renegotiate 2009 bonuses -- tying them to performance, specifically to what officers are doing to unwind the company. Geithner asked Liddy to codify their agreement in a letter, which Liddy sent the Treasury Secretary on Saturday. Throughout the weekend, Treasury Department and White House lawyers explored various options to see if they could block the bonuses, as they continue to do so today, aides said. -- jpt *This post has been updated. March 17, 2009 | Permalink | Share | User Comments (708) User Comments Feed You can follow this conversation by subscribing to the comment feed for this post. In addition to waste and corruption, lawmakers' obsession with pork raises a larger concern about the role of Congress. Members of the U.S. Congress-a national legislature that has historically debated war, Americans' rights, and broad economic policy-have become, in the words of Rep. Dan Lungren (R-CA), "mere errand boys for local government and constituents."[10] The American people elected their federal lawmakers to focus on national priorities like recession, job losses, the financial collapse, and the war on terrorism. And yet these lawmakers failed to pass appropriations bills by the start of the fiscal year and instead spent a substantial portion of 2008 securing pork projects such as: $1,049,000 to combat Mormon Crickets in Utah; $332,500 to build a school sidewalk in Franklin, Texas; $225,000 for Everybody Wins!; $200,000 for a tattoo removal program in Mission Hills, California; $190,000 for the Buffalo Bill Historical Center in Cody, Wyoming; $237,500 for theater renovation in Merced, California; and $75,000 for the Totally Teen Zone in Albany, Georgia. View a list of pork projects in the FY 2009 omnibus. $381,000 Jazz at Lincoln Center, New York, NY Nadler $5,813,000 Edward M. Kennedy Institute for the Senate, Boston, MA $6,838,000 John F. Kennedy Center for the Performing Arts $6,623,000 Formosan Subterranean Termites Research Posted by: NOT THE CHANGE WE WERE PROMISED | Mar 27, 2009 9:52:23 PM Obama listened to Mccain then he started saying the same thing I will go line by line and veto any pork barrel spending I want transparency. What a load of bull. Then what the he!!is this over 9,000 pork in Obamas new bailout bill!! Posted by: NOT THE CHANGE WE WERE PROMISED | Mar 27, 2009 9:43:47 PM Government is conjuring up this noise for something they caused. Even if they didn't know about the bonuses, they made the egregious error of granting bailout money in the first place. And the company shouldn't be whining about the overflowing "outrage"; they chose to play by the government's rules by taking the money! No business is too big to fail. No business is exempt from bankruptcy. Let them fail. Let the financial bombs go off. And when the smoke clears, new start-ups and lurking competitors will stand up and restore balance and security. If you live by the sword, expect to die by it. Posted by: Jared | Mar 22, 2009 8:09:21 PM When the stimulus (Porkulus) bill went to conference committee both the house and senate had to review and approve of every amendment to the bill. If BO don't know, its because the people on the conference committee didn't tell him. It is also noteworthy that everyone who is complaining obivously didn't read the bill they voted for. This nation is in real trouble when congress passes laws to punish private citizens. Those bonuses were legal contracts made before the government bailout and legally must be fulfilled, like it or not. Posted by: etpapa | Mar 20, 2009 9:13:10 PM Let's cut the crap: The Obama Administration claiming that they didn't "find out" about the AIG bonuses until this month is BS. This isn't the first bailout awarded which has been followed by corporate heads giving themselves bonuses. (The Administration was too stupid to ask? The Administration was too stupid to specify "no bonuses"?) Ron Wyden said he had "introduced a provision that would have forced bailout recipients to cap their bonuses at $100,000. Any amount paid above that would have been taxed at 35 percent." Allowing corporate heads who claim to need a government bailout to receive ANY bonus at all IS SHEER INSANITY! These are the same corporate heads who created these conditions. Posted by: Mary Elsener | Mar 20, 2009 4:30:24 PM This is called transparency. That is what the Republicans refused to give us. We know the problem. Now we fix it. If it was the Bush republicans we would not know it. This is honesty. Not a relatively big mistake. Posted by: Joe Knocks | Mar 19, 2009 6:53:34 PM I just want to know what this scum of an admin is going to do when freddie & fanny bonuses come due? Are they going to hide or lie about them too? I never seen a worse group of morons in such a short time> No one read the stimulus but even 3 republicans voted for this rash of spending & taking? I cannot believe Obama still is acting like he didn't do anything oh but you can make the buck stop at him? He knows he is as guilty as sin in what he is trying to do to this country and so far he is succeeding at bringing us down. But he has time to show his mug on Jay Leno.!! Posted by: barb | Mar 19, 2009 5:45:34 PM Informative post, uncolored by the political bias people here in the comment section love to see. Posted by: Tungsten | Mar 19, 2009 4:17:29 PM Obama is a incomptetent liar and is playing on people's emotions instead of making real changes that will actually benefit the general population. Of course, he is a multi-milionaire just like the rest of the Democrats (Pelosi, Reid, Dodd, Schumer etc.) who we can thank for this nice mess. Democrats the party of the people - that's a joke. Posted by: Goldengirl | Mar 19, 2009 3:57:58 PM Please forgive the typo in the comments I just made. The sentence should read: "We all know that a lack of regulations keep people from being honest, and that power corrupts. . . " Posted by: L. Rodulfo | Mar 19, 2009 1:11:38 PM I blame the incompetence of George W. Bush and the Republicans who swear allegiance to their party, rather than our country, for the great many problems the people of the U.S. are facing today. We all know that a lack of regulations keep people honest, and that power corrupts; absolute power, corrupts absolutely. And that is exactly what happened. Those with the absolute power are holding on for dear life, and are not turning over the power or the money easily. I stand with President Barack Obama. We should immediately recall any member of Congress or the Senate who opposes the will of the people and surrenders our votes to hold up the Republican Party that is clearly on the side of the few rich people. So sad, just like the Mexican PRI. Posted by: L. Rodulfo | Mar 19, 2009 1:05:56 PM i am just wondering how many more lies and cover up by the MSM by the dems on this whole mess before the American people start waking up. Obama is a smooth talker, he is like Chris Brown and the American people are like Rihanna, they keep forgiving him because 1) ohhh look he is sooo cuteeeee 2) they are afraid that if they turn on him they would appear to be racist-i do believe people are trying to prove they are not racist and they are not, but if the MSM w/ the constant daily "you are racist if you disagree w/obama" people just absorb this in their mind and they become like robots with that kind of thinking. I love my country to much to see it turned into a 3rd world poverty so that Obama can achieve his dreams, destroying america within. i love the freedom to earn money and buy things. i love the freedom to go where ever i want, go shopping, go eat out, have the freedom to "agree to disagree", the freedom to choose what party i want to support, the freedom of having balance (which is sorely lacking in today MSM and politics). i want lower taxes, i want less people on welfare;if you are on welfare you can not stay home and collect welfare, you have be either going to school to get a better education, they will have to repay back the loans just like regular college students-there needs to be more strict accountability when you are collecting welfare. imagine if less people on welfare, the gov't would have more money to spend on useful things. i find it ironic the pro-abortion protester chant "gov't out of my uterus" but yet they want gov't in women uterus (making us pay for abortion here and oversees). Posted by: jaj | Mar 19, 2009 10:01:46 AM Obama is robbing us blind.....there is no way an attorney could have missed this language. No way. And Obama is lying about this which should be telling most that something is very rotten with this man. Posted by: PresGov | Mar 19, 2009 4:21:51 AM I can't even count the number of lies Obama has been snagged in already just over the Aig nonsense...not just a crook and liar, but a dumb one. GEEZ Posted by: PresGov | Mar 19, 2009 4:18:55 AM Senate Banking committee Chairman Christopher Dodd told CNN Wednesday that he was responsible for language added to the federal stimulus bill to make sure that already-existing contracts for bonuses at companies receiving federal bailout money were honored. Sen. Chris Dodd, D-Connecticut, appears on CNN's "The Situation Room" on Wednesday. Dodd acknowledged his role in the change after a Treasury Department official told CNN the administration pushed for the language. Both Dodd and the official, who asked not to be named, said it was because administration officials were afraid the government would face numerous lawsuits without the new language. Dodd, a Democrat, told CNN's Dana Bash and Wolf Blitzer that Obama administration officials pushed for the language to an amendment designed to limit bonuses and "golden parachutes" at those companies. "The administration had expressed reservations," Dodd said. "They asked for modifications. The alternative was losing the amendment entirely." On Tuesday, Dodd denied to CNN that he had anything to do with adding the language, which has been used by officials at bailed-out insurance giant AIG to justify paying millions of dollars in bonuses to executives after receiving federal money. He said Wednesday that the "grandfather clause" language "seemed like innocent modifications" at the time. Watch Dodd's interview with CNN's Dana Bash >> Don't Miss CNN/Money: Congress to get tough with AIG Geithner: AIG must pay back bonus money Stimulus bill allows for bonuses "I agreed reluctantly," Dodd said. "I was changing the amendment because others were insistent." Dodd said he did not speak to high-ranking administration officials and the change came after his staff spoke with staffers from Treasury. The White House did not immediately respond to CNN's request for comment. At a town hall meeting in Costa Mesa, California, about an hour after Dodd spoke, President Barack Obama didn't directly address the language change -- but said he'll take responsibility for the bonuses being awarded. "We didn't draft these contracts. We've got a lot on our plate. But it is appropriate when you're in charge to make sure stuff doesn't happen like this," he said. "So we're going to do everything that we can to fix it." Dodd said later Wednesday in a written statement that his amendment allows the Treasury Department to review bonus contracts like AIG's and seek ways to get the money back for taxpayers. AIG's derivatives branch is in Dodd's home state. Many of the bonuses in question were awarded to executives at that branch. But in the written statement, Dodd said he had no idea the legislation would impact the company. "Let me be clear -- I was completely unaware of these AIG bonuses until I learned of them last week," he said. Dodd also said in the statement that his comments on Tuesday and Wednesday to CNN did not conflict. "I answered a question by CNN [Tuesday] night regarding whether or not [an exemption before] a specific date was aimed at protecting AIG," he said. "When I saw that my comments had been misconstrued, I felt it was important to set the record straight -- that this had nothing to do with AIG." According to a transcript of the Tuesday interview, Dodd was asked about an executive-compensation provision "that exempts everything prior to February 11, 2009 -- any contracts prior to that date." He said that language was not in the version of the bill that left the Senate and that he was not one of the negotiators who hammered out a compromise between the House and Senate versions of the plan. "I can't point a finger at someone who offered a change at all," he said. Asked whether he had later been able to figure out who added the language, he said, "I really don't know." In Wednesday's interview, Dodd never said his Tuesday comments had been misunderstood. "Going back and looking, I apologize," he said when questioned about his words from the day before. On Capitol Hill Wednesday, AIG chief executive Edward Liddy called the roughly $165 million in bonuses "distasteful" but necessary because of legal obligations and competition. "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 told a House Financial Services subcommittee. "Because of this, and because of certain legal obligations, AIG has recently made a set of compensation payments, some of which I find distasteful." Pennsylvania Rep. Paul Kanjorski, the hearing's chairman, responded to Liddy's statement by arguing that AIG should have refused to pay all the bonuses -- regardless of its contractual obligations with the bonus recipients. "Let them sue us," said Kanjorski, a Democrat. Liddy, who joined AIG after the bailout, said some employees have returned bonus money. Senators and representatives have vowed to get the bonus money back, but questions have arisen about why Congress didn't act to prevent the bonuses in the first place. "Well, the only lever we have in this is the fact that these corporations have come to the Congress of the United States and want a taxpayers' bailout," Sen. Chuck Grassley, R-Iowa, said Wednesday on CNN's "American Morning." "If it weren't for that, we would not have any leverage on how any individual corporation is being run, and we don't pretend to have any leverage on any corporation today in the United States that's not seeking federal help," said Grassley, the top Republican on the Senate Finance Committee. Related: Grassley defends 'suicide' comment AIG, an ailing insurance giant, has received more than $170 billion in federal assistance. Taxpayers now own nearly 80 percent of the company. In a letter to Congress on Tuesday, New York Attorney General Andrew Cuomo confirmed that AIG paid 73 employees bonuses of more than $1 million each this year after it received federal bailout money. AIG will have to return the $165 million it paid in executive bonuses to the Treasury Department, Treasury Secretary Timothy Geithner said Tuesday. Grassley and Sen. Max Baucus, D-Montana, on Tuesday introduced a plan that would impose a hefty tax on retention bonuses paid to executives of companies that received federal bailout money or in which the United States has an equity interest. Watch Grassley describe how the tax would work >> Other lawmakers, such as Rep. Charlie Rangel, D-New York, said it would be unfair to use the tax code as punishment, but Grassley said it's not a question of being fair. "It's unfair what they did to the taxpayers by paying bonuses when they don't have the money to pay bonuses," he said. iReport.com: Sound off on AIG Rep. Barney Frank, D-Massachusetts, said Wednesday that Congress can't just pass a law to abrogate any past contracts because that move would not hold up in court. Instead, he argued the executives don't deserve bonuses under the contract. Watch what Frank says about the bonuses >> "We own this company in effect, and we're not asking that these bonuses be rescinded because we have lent money to the company. I believe we are saying as the owners of the company, we do not think ... we should have paid bonuses to people who made mistakes who were incompetent," said Frank, chairman of the House Financial Services Committee. Posted by: PresGov | Mar 19, 2009 4:16:15 AM Dodd is tossing Obama under the bus saying it was the Obama administration that pushed for the contract add ons. I wonder if it had to do with Aig donating so much money to Obama? Posted by: PresGov | Mar 19, 2009 4:11:03 AM Wasn't the "No Party" against government intervention with companies employees salary and bonuses..Calling it 'dictatorship and socialism". "I was for it before I was against it." Wink, Wink...........opportunistic jerks. Posted by: sngeorgia | Mar 18, 2009 10:59:10 PM How much more of this fraud and incompetence do we have to put up with? How many more assaults on the Constitution will we have to watch as we stand and do nothing? Obama is now proposing to have wounded vets pay for their own medical treatment. He is proposing a "cap and trade system" to combat ficticious global warming by "skyrocketing" (his words) our utility bills in a recession ,to give money to other nations. He has raised our nat'l debt to 11 Trillion dollars. He has the Fed printing money with no limits right now. He is on par to turn our economy to second world status with his punitive,job killing taxes and anti business war. Obama and his people are exacerbating the political wars between the right and left intentionally so that we won't band together in oppostion to him. He is villifying his critics through daily collusion with a propagandinst media machine. He has grown a cult mob of supporters who are sated by personal email videos and text messages from the President himself for the purpose of keeping up poll numbers and to rally as a quick response force against opposition. He has called for a "national security force just as well trained and well funded as the US military". For what purpose Mr. President? He has lied so many times I couldn't list them all here. I agree with many he is a radical Communist and has surrounded himself with the same. They are intent on, to quote Obama, "remaking America". We need to call for the firing of Geithner, a full investigation of the banking fiasco and Reid Pelosi, Dodd and Frank to step down for obstruction of justice and abuse of power. That may clear the way to then seek the impeachment of the President. Posted by: rednorth | Mar 18, 2009 9:51:11 PM Flash Override: But Dodd's measure explicitly exempted bonuses agreed to prior to the passage of the stimulus bill." Dodd's measure did no suce thing. It seems that you and the rest of the Obama cheerleaders are the "dupes"! Dodd just admitted to helping to write the bonus exemption language into the stimulus bill! Posted by: reaganfan | Mar 18, 2009 9:42:43 PM Here we go again, in an otherwise outstanding news item, you have to go and repeat false GOP talking points Jake. What is your source for the following bald statement of fact: "...during the closed-door House and Senate negotiations the provision was stripped out and replaced with a measure by Dodd exempting bonuses agreed to prior to the passage of the stimulus bill on February 11, 2009." Jon Karl is flat wrong when he reports: "But Dodd's measure explicitly exempted bonuses agreed to prior to the passage of the stimulus bill." Dodd's measure did no suce thing. Once you have confused the right wing dupes, you are never going to be able to tell the full story, because they are just going to attribute the new "fact" to "everybody knows" when there is actually no evidence. Posted by: Flash Override | Mar 18, 2009 7:59:33 PM Next Comments >> Post a comment Name: _____________________ Email Address: _____________________ URL: _____________________ [ ] Remember personal info? Comments: _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ [ Post Comment ] IFrame: ts POLITICAL VIDEOS Quantcast Quantcast