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AIG Bonuses Light a Fire Under Congress

By Ben Pershing
The AIG bonus controversy showed no signs of abating Wednesday, providing a useful reminder of how quickly Congress can move when it's scared, like an otherwise tame animal that lashes out when it's cornered.

A body that can take weeks just to decide whether to clear its throat now appears set to pass a strange, punitive tax bill against recipients of those bonuses with remarkable haste. The House is expected to act today, while the Senate could move soon after. It remains unclear how much long-term political impact the AIG story will have; for one possible comparison, recall the Dubai Ports World controversy, which burned hot for a few weeks but seemed to fizzle out fairly quickly. It could just be that this story, like that one, is a convenient hook for populist anger. Or it might be the thread that unravels the government's entire bailout strategy, as increased scrutiny of the whole edifice brings increased criticism. Either way, there's little doubt that both the Obama administration and Congress, particularly Democratic leaders, are genuinely afraid of this story.

It seems that there's one Democrat who really should be afraid. If you listened closely yesterday in the Capitol, it's possible you heard the sound of Chris Dodd's career coming to an end. Too harsh an assessment? Perhaps, but it's hard to overstate how badly the Connecticut senator stepped in it when he admitted that he had put language in the stimulus bill ensuring that contractual bonuses were paid out at companies receiving bailout money, a day after saying he didn't know how the language got in. Dodd blamed the administration for asking for the change, but this revelation -- on top of the Countrywide VIP scandal and recent coverage of his personal financial deals -- will make his reelection fight even tougher in 2010. Will Dodd put his head down and fight to keep his seat, or might he decide to retire?

Continue reading on the Political Browser »

By Paul Volpe  |  March 19, 2009; 8:14 AM ET
Categories:  The Rundown  
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Comments

It's not accident that Obama and Dodd each received over $100,000 in campaign contributions from AIG.

Posted by: JakeD | March 23, 2009 1:06 PM | Report abuse

Now Congress and the White House are worried about bonuses. Where was the worry before they gave our tax money away without any strings attached. It has become clear that they knew all along what they were doing. Bonuses were given out with their blessing. I never believed that Government in this country could be so crooked and in competent. I do believe it now.

Posted by: rrdn96 | March 22, 2009 6:57 PM | Report abuse

JohnQuimby:

That works BOTH ways, you know? Obama signed the "Stimulus" Package with pre-existing bonuses left intact, thanks to some proding of Sen. Dodd. Keep in mind that some Republicans, including Rep. Boenher, have been consistent bother before and after this fiasco.

Posted by: JakeD | March 20, 2009 3:18 PM | Report abuse

JohnQuimby:

That works BOTH ways, you know? Obama signed the "Stimulus" Package with pre-existing bonuses left intact, thanks to some proding of Sen. Dodd. Keep in mind that some Republicans, including Rep. Boenher, have been consistent bother before and after this fiasco.

Posted by: JakeD | March 20, 2009 3:10 PM | Report abuse

Feb.6, 2009

GOP OPPOSES PAY LIMITS ON BAILED OUT BANKERS

"President Obama has proposed capping compensation for executives at banks that take taxpayer bailout money at $500,000. Republicans hate the idea..."

That's what the President knew and that's when he knew it.

Now, conservatives who opposed him have just voted overwhelmingly for a tax increase and must regret opposing the temporary nationalization of the banks.

We could have prevented the bonus scandal AND blocked AIG's suit demanding that the government give back 306 million dollars in taxes.

One Feb 6th, the GOP opposed what they endorsed today. A couple of weeks late and hundreds of millions of dollars short.

Posted by: JohnQuimby | March 20, 2009 12:59 AM | Report abuse

"They will bring down your free-trade economy and your children WILL live under a Soviet style form of communism."

Is there someplace where people who talk like this are taken seriously?

I mean in 2009, not 1955.

Posted by: nodebris | March 19, 2009 3:48 PM | Report abuse

AIG is gifting nearly all of the 165-billion taxpayers dollars received to foreign companies and investors.

Dodd, Obama and Reid, Frank, Rangle and the rest of my comrades don't care what you think! Who are you? You are nobody . . . NOBODY!
They will bring down your free-trade economy and your children WILL live under a Soviet style form of communism.
Know it, live it, understand it.
It was you who elected Obama!!!

Jeremiah Wright

Posted by: lclifton | March 19, 2009 1:46 PM | Report abuse

Chris Dodd promised an explanation regarding his "sweet heart" mortgages from CountryWide Financial!

Chris Dodd refused to act when the Bush administration requested increased regulation of Fannie Mae and Freddie Mac in 2004, which led to the financial mess we are in!

Chris Dodd has yet to offer an explanation regarding the purchase of his vacation home in Ireland from an individual who went to jail for financial fraud!

Chris Dodd made it possible for the traders at AIG to pocket huge bonus payouts after they placed the entire world at risk!

Why?

Chris Dodd needed campaign contributions to benefit Chris Dodd.

The Democrats campaigned on transparency and returning ethics to Washington D.C. It is time for the ethics committee of the United States Senate to act!

Posted by: mwhoke | March 19, 2009 12:57 PM | Report abuse

Think about your vote in 2010.

Posted by: arby1 | March 19, 2009 11:39 AM | Report abuse

A 90% tax being made in a day for a legal binding contract. No matter if you like the bonus or not open your eyes and see what is going on here. They could make this over-tax policy on ANYTHING, without making it illegal. And do it overnight.

Posted by: arby1 | March 19, 2009 11:26 AM | Report abuse

The venomus display yesterday in Congress was appalling! They should be ashamed of themselves! Mr. Liddy (AIG) inherited a disaster from AIG and is trying to fix it. There's no magic wand to wave nor is there a magic formula for Mr. Liddy. However, Mr. Liddy should have been treated with more respect than he received from all of the "unwitting accomplices" to this plan in the congress. Get rid of Geithner, Obama, Pelosi, Reid, Dodd, and their ilk ASAP! I wonder if there are any grounds for impeachment. Any atty's out there with an opinion?

Posted by: LegalNurse | March 19, 2009 11:24 AM | Report abuse

(Bloomberg) -- Senate Banking Committee Chairman Christopher Dodd said the Obama administration asked him to insert a provision in last month’s $787 billion economic- stimulus legislation that had the effect of authorizing American International Group Inc.’s bonuses.

Dodd, a Connecticut Democrat, said yesterday he agreed to modify restrictions on executive pay at companies receiving taxpayer assistance to exempt bonuses already agreed upon in contracts. He said he did so without realizing the change would benefit AIG, whose recent $165 million payment to employees has sparked a public furor.

Dodd said he had wanted to limit executive compensation at companies that got money from the government’s financial-rescue fund. AIG has received $173 billion in bailout money. His provision was changed as the stimulus legislation was negotiated between the House and Senate.

“I did not want to make any changes to my original Senate- passed amendment” to the stimulus bill, “but I did so at the request of administration officials, who gave us no indication that this was in any way related to AIG,” Dodd said in a statement released last night. “Let me be clear -- I was completely unaware of these AIG bonuses until I learned of them last week.” He didn’t name the administration officials who made the request.

WHAT DID OBAMA KNOW AND WHEN DID HE KNOW IT?

Posted by: JakeD | March 19, 2009 11:16 AM | Report abuse

THE LARCENY OF DISTRACTION


While the manufactured economic crisis effectuates the fleecing of the middle class by the clever plotting of the power elite, and manufactured controversies distract the masses from the root causes of this global transfer of wealth...

...freedom also is being stolen from the people; but the mainstream media "watchdogs" are too busy chasing the manufactured tale of the day to notice who's making off out the back door with the coin of liberty.

EXTRAJUDICIAL TARGETING AND PUNISHMENT OF AMERICAN BREADWINNERS AND THEIR FAMILIES:

THE UNTOLD STORY BEHIND THE ECONOMIC MELTDOWN.

***

TEAM OBAMA: WHAT DO YOUR BUSH HOLDOVERS KNOW ABOUT THESE ONGOING SECURITY-INTEL-REVENUE 'MULTI-AGENCY COORDINATED ACTIONS'...

* Silent, covert microwave radiation weapons (D.E.W.) assaults on innocent but "targeted" U.S. citizens;

* Terroristic vigilante community gang stalking, surreptitious home entry, police-tolerated vandalism;

* Secret federal "programs of personal financial destruction" that have used the IRS as an ideological tool of "social cleansing."


http://www.nowpublic.com/world/gestapo-usa-govt-funded-vigilante-network-terrorizes-america
http://www.nowpublic.com/world/domestic-torture-radiation-weaponry-americas-horrific-shame

OR (if links are corrupted / disabled):

http://www.NowPublic.com/scrivener

Posted by: scrivener50 | March 19, 2009 10:58 AM | Report abuse

Let's hope that AIG is not the only bail-out recipient to get nailed. That would just be "business as usual" find a scapegoat and divert all the attention off everyone else. Bernie and AIG have a lot of company once the lights are turned on to this corrupted (rotten) system.

Time for those at the top to stop -hitting on those at the bottom. It should be a flowing; not trickling economy. That's democracy!

Posted by: inewsmaster | March 19, 2009 10:23 AM | Report abuse

This $165M means little compared to the tax breaks that the IRS is working on to give to the people who climbed on Madoff's pyramid. The "victims", formerly "investors", may be able to write off their loss as "theft" loss after the pyramid tumbled. If the total loss is $50B, writing it all off, at 20% tax break, the IRS is giving back $10B. That's 60 times the money that AIG people are "stealing" from American taxpayers.
Now I wonder if IRS stands for Internal Robbery Service. And then who's robbing who?

Posted by: scooterlibre | March 19, 2009 10:17 AM | Report abuse

Why throw Dodd under bus? Someone from Obama's team ASKED Dodd to allow the AIG bonuses.

Posted by: JakeD | March 19, 2009 10:08 AM | Report abuse

Such outrage!
But what about reporting on the retention bonuses at Fannie and Freddie. They are after all just in your back yard, or is that to far to go for the whole story?

Posted by: smb1 | March 19, 2009 9:56 AM | Report abuse


It is all the fault of David X Li and his
"Manchurian Formula"
VJ Machiavelli
-------------------------------------------------------

David X. Li
From Wikipedia, the free encyclopedia

David X. Li is a quantitative analyst and a qualified actuary who pioneered the use of Gaussian copula models for the pricing of collateralized debt obligations (CDOs).[1][2]
Li was born and raised in a rural part of China during the 1960's.[1] He received a master's degree in economics from Nankai University. After leaving China he earned an MBA from Laval University in Quebec and a PhD in statistics from University of Waterloo in Ontario.[1] His financial career began in 1997 at Canadian Imperial Bank of Commerce.[1] In 2004 he moved to Barclays Capital and headed up the quantitative analytics team.[1]
Li's paper "On Default Correlation: A Copula Function Approach"[2] was the first appearance of the Gaussian copula applied to CDO's, which quickly became a tool for financial institutions to correlate associations between multiple securities.[1] This allowed for CDOs to be accurately priced for a wide range of investments that were previously too complex to price, such as mortgages. However in the aftermath of the Global financial crisis of 2008–2009 the model has been seen as fundamentally flawed and a "recipe for disaster".[1] According to Nassim Nicholas Taleb, "People got very excited about the Gaussian copula because of its mathematical elegance, but the thing never worked. Co-association between securities is not measurable using correlation," in other words because past history is not predictive of the future. "Anything that relies on correlation is charlatanism."[1] Li himself always understood the limitation of his model, in 2005 saying "Very few people understand the essence of the model."[3] Kai Gilkes of CreditSights says "Li can't be blamed", although he invented the model, it was the bankers who misinterpreted it.[1]
In 2008 Li moved to Bejing where he works for China International Capital Corporation as head of the risk-management department.[1]
1.
2. Recipe for Disaster: The Formula That Killed Wall StreetFeb 23, 2009 ... David X. Li, it's safe to say, won't be getting that Nobel anytime soon. One result of the collapse has been the end of financial economics ...
3. www.wired.com/techbiz/it/magazine/17-03/wp_quant - 57k - Cached - Similar pages
4. ===================================================


VJ Machiavelli
http://www.vjmachiavelli.blogspot.com
NO MORE SCHUMER
NO MORE PELOSI
NO MORE RANGEL
NO MORE ENGEL AND HIS MILLION DOLLAR HOME IN MARYLAND

Posted by: VJMachiavelli1 | March 19, 2009 9:27 AM | Report abuse

this is just a small part what about fanny and freddy the the bonuses that were payed out there why isnt that news

Posted by: getsix1 | March 19, 2009 9:15 AM | Report abuse

Here is one of the first main stream media articles that has nailed the real villain in all this: Goldman Sachs
The article: AIG-The Biggest Shark of ALL http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/03/18/ED0316IQ82.DTL

My only addition to the sound arguments in this article is to look at how desperate GS was to get $10 billion from Warren Buffett. For half what they would have lost at AIG they gave him the deal of the century (suggesting they neded the money to avoid bankruptcy). So what would you expect they would be prepared to do for double that? Con and rob taxpayers...no problem at all!

Posted by: xcharliex07 | March 19, 2009 9:08 AM | Report abuse

The comments to this entry are closed.

 
 
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