WASHINGTON — Leaders of the White House economic team and the Senate’s top Republican bellowed about bonuses at a bailed-out insurance giant and pledged to prevent such payments in the future.
From one Sunday talk show to the next, they tore into the contracts that American International Group asserted had to be honored, to the tune of about $165 million — part of a larger total payout reportedly valued at $450 million.
The company has benefited from more than $170 billion in a federal rescue.
AIG has agreed to Obama administration requests to restrain future payments. Treasury Secretary Timothy Geith ner pressed the president’s case with AIG’s chairman, Edward Liddy, last week.
Lawrence Summers, President Barack Obama’s top economic adviser, said: “The easy thing would be to just say . . . off with their heads, violate the contracts. But you have to think about the consequences of breaking contracts for the overall system of law, for the overall financial system.”
Summers said Geithner used all his power, “both legal and moral, to reduce the level of these bonus payments.” The Democratic administration’s argument about the sanctity of contracts was more than Senate Republican leader Mitch McCon nell of Kentucky could bear.
“Did they enter into these contracts knowing full well that, as a practical matter, the taxpayers of the United States were going to be reimbursing their employees?” McConnell asked. “Particularly employees who got them into this mess in the first place? I think it’s an outrage.”
