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Pelosi: Congress Will Recover AIG Funds

From Nancy Pelosi’s taxpayer funded website, The Gavel:

AIG Bonuses Are Unconscionable – Congress Will Examine Legal Options to Recover Taxpayer Funds

March 15th, 2009 by Speaker Pelosi

While American workers see their wages decline and face record job losses, it is unconscionable that AIG, which is receiving more than $170 billion in government assistance, would permit such extravagant executive compensation practices without any accountability to the taxpayer.

I have asked Chairman Barney Frank of the House Financial Services Committee to examine options that are legally available to recover taxpayer funds of companies that abuse the privilege of taxpayer assistance.

I call upon the executives at AIG to right the wrong they have done to American taxpayers, who are footing the bill for the most expensive government rescue in history. They should renounce the bonuses and refuse the excessive retention pay they previously agreed to.

Congress, working with the Obama Administration, has put in place tough executive compensation and responsibility measures to ensure that taxpayers are protected and we will continue to take all action necessary to ensure transparency and accountability.

Mind you, this is the same Nancy Pelosi who demands that various sized Air Force jets be at her beck and call 24 hours a day.

The same Nancy Pelosi who has blocked any efforts to stop Congress from getting automatic pay raises year in and year out.

This article was posted by Steve on Monday, March 16th, 2009. Comments are currently closed.

27 Responses to “Pelosi: Congress Will Recover AIG Funds”

  1. BillK says:

    Because no member of Congress would recognize incentive pay or pay for performance – concepts entirely foreign to them.

    Of course most Americans are also unfamiliar with wanting to keep talent, and the fact that people can outperform, earning bonuses, at a time when other divisions of a company hemorrhage cash.

    No, it’s much easier to demonize banks and insurance companies, per usual, as a prelude to socializing them.

    Meanwhile, an update, of sorts, from the AP:

    AIG says emergency aid used to pay other banks

    By Jennifer Malloy Zonnas

    NEW YORK (AP) — American International Group Inc. used more than $90 billion in federal aid to pay out foreign and domestic banks, some of whom had received their own multibillion-dollar U.S. government bailouts.

    The embattled insurer’s disclosure on Sunday came amid outrage on Capitol Hill over its payment of tens of millions in executive bonuses, and followed demands from lawmakers that the names of trading partners who indirectly benefited from federal aid to AIG be made public.

    The company, now about 80 percent owned by U.S. taxpayers, has received roughly $170 billion from the government, which feared that its collapse could cause widespread damage to banks and consumers around the globe.

    “The ability of AIG to meet its obligations is important to the stability of the U.S. financial system and to getting credit flowing to households and businesses,” Federal Reserve spokeswoman Michelle Smith said.

    Some of the biggest recipients of the AIG money were Goldman Sachs at $12.9 billion, and three European banks – France’s Societe Generale at $11.9 billion, Germany’s Deutsche Bank at $11.8 billion, and Britain’s Barclays PLC at $8.5 billion. Merrill Lynch, which also is undergoing federal scrutiny of its bonus plans, received $6.8 billion as of Dec. 31.

    The money went to banks to cover their losses on complex mortgage investments, as well as for collateral needed for other transactions.

    Other banks receiving between $1 billion and $3 billion from AIG’s securities lending unit include Citigroup Inc., Switzerland’s UBS AG and Morgan Stanley.

    Municipalities in certain states, including California, Virginia and Hawaii, received a total of $12.1 billion under guaranteed investment agreements.

    The company said it used billions more to fund its Maiden Lane business, which was set up following the federal bailout to purchase toxic assets, and to repay debt and provide capital for some of its operations.

    “I’ve been asking for this information for months. This is a good first step, but I’m concerned by how long it took,’ said Rep. Carolyn Maloney, D-N.Y., who is chair of Congress’ Joint Economic Committee. …

    http://hosted.ap.org/dynamic/stories/A/AIG_BAILOUT

    • canary says:

      SG, worse then her using the jet, is they are for non-business home trips to California. So, much for Green Pelosi.
      Pelosi won’t find any legal options in taking the AIG money back. But, I’m sure she and Frank will find a way to screw AIG. Shame Obama sued the Citi-Group as a young lawyer to give out risky loans.

  2. BillK says:

    By the way, showing once again why Republicans are doomed in future elections, Mitch McConnell, Senate Republican leader, chimed in:

    “For them to simply sit there and blame it on the previous administration or claim contract — we all know that contracts are valid in this country, but they need to be looked at,” McConnell said. “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? Particularly employees who got them into this mess in the first place? I think it’s an outrage.

    http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/03/15/national/w123922D46.DTL

    Thanks for jumping on the class envy bandwagon, Senator.

    I hope you save your political butt as you destroy the reputation of your party.

  3. Rusty Shackleford says:

    She’s just nutso. Blatantly insane. And an idiot to boot. So there’s an insane idiot at the wheel there, driving us all on the bus to a place only she is certain of.

    I’m so glad that she found AIG blame-worthy. I was beginning to worry that she might do something crazy.

  4. pagar says:

    Speaking of who got us in this mess in the first place, I can’t think of anyone who had more to do with creating this whole mess than Barney Frank. No American taxpayer is safe with these people running the country.

    • heykev says:

      I wonder if there is ANY way to sue him for maleficence or dereliction of duty…I’m not a lawyer, so am not sure what the proper term is…or if there is a way to sue or remove from office Mr. Frank. He deserves jail time, but since he’ll never get that…was considering what other options there are.

  5. curvyred says:

    Speaking of taxpayer money – how about rescinding the COLA they have just enjoyed – and discontuining automatic increases from here forward ?

  6. Right of the People says:

    If congress was given annual reviews that determined their pay, they’d all either be fired or at best have their pay cut to just above minimum wage. What a bunch of hypocrites! I say we vote them all out the next election, vote against EVERY incumbent. They are a waste of oxygen.

    10-7

    • proreason says:

      They do get bi-annual reviews, and we have the opportunity in 2010 to contribute.

      Too bad they own the printing presses lock stock and barrel.

      BTW, except for McCain I voted against EVERY incumbant in 2008 and persuaded several people to do likewise. And the McCain vote was as a member of the Get Drunk Club.

      I know that is a controversial approach, but so far, it seems to have been the only supportable one.

      I truly believe that the vast majority of people in Congress are actual criminals and should be in jail, some for life.

    • heykev says:

      Pro – I would agree with you on this. EVERYONE in congress must go. Frank and Dodd should be behind bars.Those not headed directly to jail, should just simply go.

      At the very least, I’d like to see republican’s grow a pair and actually stand up for no earmarks, no pork, shrinking the size of gov’t. etc. I was appalled that some voted for the stimulus and earmark packages. I was livid that Republican’s are part of the earmark problem. This must stop!

  7. marinetbryant says:

    Didn’t these self same idiots vote for TARP? Did any of them read the freaking thing?

    Just another CYA moment. How does that old saying go-“Methinks they doth protest too much.”

    Tom

  8. DGA says:

    As much as I think that AIG risked and lost public money, not all of their employees are to blame. Quite a few of them probably shouldn’t be getting one cent of bonus money, but I will always believe that there are still some good people working there. Having said that, I now can’t figure out why ANY self respecting financial whizz would stay there, I bet all of their sharp people are on their way out the door, because if pelosi etc. are successful in stopping their bonuses then it must be clear to all of them, that they now work for the democrats, essentially communist workers all of them. All this will lead to certain failure of AIG with no recovery. Everything that pelosi etc touch will turn to dust in a short time.

    • proreason says:

      Almost the entire problem was concentrated in the London office of AIG, where Brit whiz kids invented the derivatives and credit swaps that allowed the financial industry to take on the amount of risk that the U.S. government (Drooling Barney and the boys) directed them to take on.

      Remember, it was Franklin Raines, supported by Drooling Barney and MaximumStupid Waters who declared that real estate has no risk.

      So, naturally, given the green light by esteemed luminaries of that degree, AIG found some bright kids who did as directed.

      The result is that the world financial system became leveraged multiple times what it should have been, which then allowed George Soros to prick the gasbag just-in-time to elect The Moron and now we are all covered with debt our great-grandkids will be paying back by turning windmills by foot.

      Looks to me like AIG employees did EXACTLY as directed by our beloved government and therefore they deserve the full bonuses they contracted for.

      But somehow, Drooling Barney, MaximumStupid Maxime and the other armpit sniffers on our Banking Committees are having a hissy about AIG following orders. Such is life under the new commissars.

      Go figger.

    • MinnesotaRush says:

      Right on the head, Pro!!!

      “The money went to banks to cover their losses on complex mortgage investments,”

      Those same “complex mortgage investments” the nitwits in DC saw no problem with while they (of course) were getting rich from (on top of AND under the table)?!?!

      Canniving and dishonest crooks! But they’re expert at pushing the blame and responsibility away from themselves.

      “Congress Will Examine Legal Options to Recover Taxpayer Funds”

      Yeah .. righhhhht! S’pose the “problem” could’ve been avoided???

      Disgusting! Absolutely disgusting!

    • Odie44 says:

      AIG has been a hot mess for quite some time, though no one seems to care:

      Greenberg, who was pushed out as CEO three years ago, remains a significant shareholder in the company and has also fiercely criticized its practices. However, Greenberg himself continues to be under fire. Three weeks ago, the SEC gave him a Wells notice—essentially a warning of a pending indictment—for possible accounting impropriety in dealings between AIG and General Re, a reinsurer owned by Warren Buffett’s conglomerate, Berkshire Hathaway. The transaction in question resulted in an extra $500 million appearing on AIG’s balance sheets.

      I worked for an Asset Management company bought by these clowns 10 years ago. I believe 75% of people left once they came slithering in. Notice a familiar name “General Re” in the indictment… the same foreign company who just received a few hundred million…

      Qucik story of true greed: Our asset division grew from $1.5B to $3B in 18 months, eclipsing the 5 years it took to go from $500M – to $1.5B. It was a windfall year (and key component of AIG’s purchasing of said company) – now guess how much the wholesalers (the actual revenue generators within asset management companies) received as a year-end bonus… a $12 bottle of wine!!!

      2 months later, within a corporate communication newsletter – they annunced our Chairman and company just bought $50M in art work to house as an “investment” in the corporate headquarters… because we all know art is much more important to a company than its people!

  9. TwilightZoned says:

    Does anyone really think congress is going to stop AIG from giving out bonuses? A more likely scenario is congress will expect AIG to pay the bonus money back. (And AIG won’t ask the morons who got it to give it back.) Only one problem, the tax payers own 80% of AIG. Screwed again!!!

    • BillK says:

      Which “morons” are you referring to?

      While yes, there are those at AIG who made bad decisions, the bottom line is if their employment contracts called for bonuses to be paid for meeting certain thresholds, those bonuses need to be paid.

      If the Government can arbitrarily void employment contracts, what other contracts can they decide to void?

      Why is any of this Pelosi or anyone else’s business given there were no restrictions on how TARP money was to be used?

      Many people warned of what a boondoggle TARP was from the get-go, but no, it “had to be done now.”

      Now Congress is trying to add conditions after the fact.

      The only leverage they have is the fact that AIG is still losing enough money that they need more and more handouts.

    • Odie44 says:

      BillK –

      While I agree we dont need or want gov in the daily contract/commissions business – the key question is were these agreements made, including artificial run ups, legally.

      Take a look at the S&L/IPO scandals of the past 25 years – where brokers made billions – and either ended up in jail after the fact or lost their licenses to practice in the regulated finance world. They “earned” the money , legally under contract, though under false pretenses. As a former Wall Street retail broker in the 90’s – I can promise you – the movie Boiler Room is light compared to what really goes on behind the scenes. The day I saw warrants trading higher than a stock price, intra day – with brokers huddled around a Level 3 screen (illegal)… all in the name of “commissions” or “bonuses”

    • TwilightZoned says:

      I agree the government should not interfere with private enterprise and contracts should be honored. Odie made the point I failed to make.

      What is even scarier now is congress discussing taxing 100% of the bonuses. I don’t think it’s too far of a stretch for the government to then turn this into regulating out of the norm taxes on anyone and everyone who receives a bonus in the future.

  10. pdsand says:

    If I’m not mistaken, the whole dang point of this democrat AIG bailout was to keep the company out of bankruptcy so that they would continue to pay their employees, and so that they would continue to pay out claims on these credit swaps, to keep the U.S. financial system from collapsing.
    Thus far, the only complaints we ever hear from Democrats are that they have the nerve to pay their employees (bonuses), and that they paid out claims on the credit swaps (overseas). So why DID the democrats feel the need to bail them out, if for no other reason than just so they could have ownership and control of major U.S. corporation?

  11. canary says:

    Obama had scheduled a speech Monday to announce new help for recession-pounded small businesses. But first, he said, he had a few words to say about AIG. He lost his voice at one point and ad-libbed, “Excuse me, I’m choked up with anger here.” It was just a light aside, but he meant the sternness of his remarks to come through.

    “This is a corporation that finds itself in financial distress due to recklessness and greed,” Obama declared.

    He said he had directed Treasury Secretary Timothy Geithner to “pursue every legal avenue to block these bonuses and make the American taxpayer whole.”

    Later, White House spokesman Robert Gibbs said the administration would modify the terms of a pending $30 billion bailout installment for AIG to at least recoup the $165 million the bonuses represent. That wouldn’t rescind the bonuses, just require AIG to account for them differently.

    http://news.yahoo.com/s/ap/20090317/ap_on_go_pr_wh/obama_aig

    and we know Geithner sure knows how to make the American taxpayer whole.
    say what, Obangria ? recklessness? anger? greed? Is that West Wing show still on. ohhh West, Left. I get it.

  12. DGA says:

    “He lost his voice at one point and ad-libbed, “Excuse me, I’m choked up with anger here.”

    More likely that his ever present teleprompter had a minor glitch and he actually was ‘lost for words’.

    • proreason says:

      The country is getting choked up with anger here……….and it ain’t about AIG

    • pdsand says:

      I’m sorry, maybe the U.S. treasury holds stock in these companies or whatever, but I will never look at it as if I have a share of AIG because of this stupid TARP. I know I won’t see any dividends in the mail, nor will I have any asset that I can sell in my bank account. I look at it as if the government should never have demanded these shares of stock in the first place, and the sooner they’re given or sold back to the company the better. I don’t want to have any control or say so over any company through my elected representatives, the whole thing stinks to the high heavens to me.
      I just can’t imagine Obama or any of his Obamabots thinking they have a legitimate say over the operations of a company just because of this stupid bailout. Like their looking for a shareholder ballot in the mail or something for every american taxpayer. Even more insidious, we skip all that nonsense, and since Obama’s the president he just becomes dictator of AIG. That’s what I’m choked up in anger over, not the fact that somebody got a bonus.

    • pdsand says:

      Even more insidious, he becomes dictator of AIG and goes around telling them what to do, then he has the nerve to say he’s doing it in my name, to protect my interest (that doesn’t actually exist) in this company.

  13. proreason says:

    I’ll say it again…..the Financial Services business operated just fine until the government decided to give away mortgages to deadbeats.

    It’s not that FS personnel weren’t greedy….OF COURSE they are greedy. Always have been. All capitalists are greedy. That’s why we have medicines that allow us to live 20 years longer than our grand-parents.

    But FS also operated from the mid-30’s until a year ago without destoying the wealth of the world. Since there are hundreds of them, no wild hare could undermine the entire planet.

    But when Drooling Barney and the boys began dictating who should get loans and under what terms, and how those crap loans should be hidden in derivatives and credit swaps, the shit hit the fan, BIG TIME.

    Now AIG is the designated fall guy for the The Moron, the Drooler and their knee-breakers. As far as I can tell AIG was doing the criminal bidding of the U.S government. And I haven’t heard a word from any source that indicates otherwise.

    It’s like Tony Soprano telling his henchman to commit murder and then leading the prosecution to save his own ass. There should be a double death penalty for this kind of monstrous crime.

    The pompous popumoralists, including everybody in Congress, and windbags like Bill O’Reilly should keep their traps shut before they get the population so riled up that they get themselves deposed.

    • Odie44 says:

      Pro –

      True, but I would like to add – take a look back at when the market lost at least 25% of its value over a 12 month period in history and combine that with ridiculous “platforms” that lead to greed and wealth destruction: Government is always involved by either allowing new vehicles through laws OR overriding existing regulations and protections initially put in place for a reason.

      Glass Steigal Act being overturned.
      Sarbanes-Oxley
      Variable Annuities
      S&L
      IPO’s

      I beleive in limited gov regulation – like the SEC and NASD actually doing their job – but complicated vehicles are created to confuse the average guy and are always OK’ED BY THE GOV, sort of like the current default swap reverse ponzi scheme – which was allowed thorugh the gov, S&L loans of the 80’s, IPO run ups and underwriting laws being loosened. These guys (the FS sector and Gov) know exactly what they are doing and the risks. Risk aversion is part of their formula and in the default swap case, the main problem – so for them to claim “we didnt see it coming” is complete bull shit, whether the gov or the FS – since they are so intertwined.

      It is the fact the bet didn’t pan out, was overleveraged and in the end – anything asset related can literally go to 0.

      Its like gambling in Vegas. The lust to win overrides everything. People know the house is favored 95% or more of the time and understand they can lose everything in 1 hand. So what do people do when the see they are losing? Take out markers (which are readily available to anyone) which increases their total “investment” , with the hope it will finally pay off.

      They know the odds. Know the risk. Know they have to pay it back. At least gamblers are honest and dont cry “good lord I didnt know that could happen”, they worry about the next marker, bet and game…


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