WASHINGTON — Talking tougher by the hour, livid Democrats confronted beleaguered insurance giant AIG with an ultimatum Tuesday: Give back $165 million in post-bailout bonuses or watch Congress tax it away with emergency legislation.
Republicans declared that the Democrats were hardly blameless, accusing them of standing by while the bonus deal was cemented and suggesting that Treasury Secretary Timothy Geithner could have done more. While the White House expressed confidence in Geithner, it was placing responsibility for how the matter was handled on his shoulders.
Fresh details, meanwhile, pushed AIG outrage ever higher: New York Attorney General Andrew Cuomo reported that 73 separate company employees received bonus checks of $1 million or more last Friday. This at a company that was failing so spectacularly the government felt the need to prop it up with a $170 billion bailout.
The financial bailout program remains politically unpopular and has been a drag on Barack Obama’s presidency, even though the plan began under his predecessor, George W. Bush. The White House is well aware of the nation’s bailout fatigue — anger that 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.
The administration wouldn’t be pleased to hear what Maria Panza- Villa, of Hillsboro, Ore., had to say: “Wasn’t Obama supposed to fix this?” asked the mother of two who said she has lost three jobs since November as one employer after another went under.
AIG chief executive Edward Liddy can expect a verbal pummeling today before a House subcommittee.
On Capitol Hill late Tuesday, House Democrats directed three powerful committees to come up with legislation to authorize Attorney General Eric Holder to recover bonus payments made by companies like the ones paid last week by AIG.
Senate Democrats, meanwhile, suggested that if the AIG executives had any integrity, they would return the $165 million in bonus money. One leading Republican even suggested they might honorably kill themselves, then said he didn’t really mean it.
Whatever the process, lawmakers of all stripes said, the money belongs back in the government’s hands.
“Recipients of these bonuses will not be able to keep all of their money,” declared Senate Majority Leader Harry Reid in an unusually strong threat delivered on the Senate floor.
“If you don’t return it on your own, we will do it for you,” echoed Chuck Schumer of New York.
Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, noted that the government, through the bailout, is now an 80 percent owner of the company and suggested that was grounds to sue to recover the bonuses.
“We’re the owner of the company. I think it’s time to exercise our ownership rights,” Frank said. “The strongest case for getting those bonuses back is as the owner of the company rather than the regulator.”
Frank said authority exists under the same 1932 statute that the Federal Reserve first used when it came to AIG’s assistance last fall.
Republicans said Obama and his administration should have leaned harder on AIG executives to reject the extra pay, raising some speculation over Geithner’s future.
“I don’t know if he should resign over this,” said Sen. Richard Shelby, R-Ala. “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.”
The administration quickly moved to quash talk of Geithner’s ouster. White House spokesman Robert Gibbs said Obama retains full confidence in his treasury secretary.
