The politics of AIG
The pols are lining up to score points on the AIG bonuses mess.
“I supported this administration’s plan to inject capital into the marketplace, but like the President, I believe that there needs to be accountability. We need to stabilize the economy and help struggling homeowners, not reward failed corporate management,” Democratic Party gubernatorial-nomination Terry McAuliffe said today in a statement regarding the controversial decision by the insurance giant to pay out $165 million in bonuses in a time when the company is afloat almost entirely because of the infusion of money from federal taxpayers.
McAuliffe used the occasion to pledge to not accept corporate or corporate PAC campaign contributions from any companies receiving federal bailout money, a nice touch. A nicer touch – he pledged to donate his salary as governor to built a “gymnasium for a school that needs one” and challenged CEOs across Virginia to “make similar commitments to help out their communities in need.”
Fifth District Congressman Tom Perriello, meanwhile, is helping lead congressional action to block the bonuses, cosponsoring HR 1518, which would tax bonuses of more than $100,000 for AIG employees and employees at other institutions receiving bailout funds at a rate of 100 percent, effectively returning the bonuses back to federal taxpayers.
“When it comes to holding corporations accountable, it’s time to move from rhetoric to results. This legislation will win back these bailout dollars for the American taxpayer. No more excuses, no more delays. My constituents’ hard-earned dollars should not be used to reward reckless corporate behavior, and I’m going to fight to get it back for them. Outrage isn’t enough; taxpayers deserve action,” Perriello said.
U.S. Sen. Jim Webb, D-Va., for his part pledged to do … something.
“There is nearly universal agreement in the Senate that AIG, the recipient of nearly $200 billion in U.S. taxpayer dollars, is out of line by offering excessive bonuses to some of the very executives that helped to feed the financial crisis by investing in toxic assets. The American people deserve accountability on how their money is spent,” Webb said in a statement.
“It is important to put into context that, while the U.S. auto industry was ultimately provided $24 billion in repayable loans to help ensure the viability of millions of American jobs, AIG received $197 billion in federal dollars with little apparent oversight. Of that amount, AIG has distributed tens of billions of dollars to foreign banks—more than the entire amount loaned to the auto industry. Furthermore, one of the requirements for the auto industry to receive federal assistance was to renegotiate existing workforce contracts, yet we are told that Wall Street contracts are sacrosanct,” Webb said.
“Most agree that government action was necessary to stabilize the financial system, but lavish bonuses and payouts to foreign banks were not Congress’s intent and do not represent a proper usage of taxpayer money. I will continue to push the administration and this Congress to strengthen oversight, especially in light of AIG’s recent actions,” Webb said.
- Story by Chris Graham
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Statement from Barack Obama:
Statement from President Barack Obama
“Today’s vote rightly reflects the outrage that so many feel over the lavish bonuses that AIG provided its employees at the expense of the taxpayers who have kept this failed company afloat. Now this legislation moves to the Senate, and I look forward to receiving a final product that will serve as a strong signal to the executives who run these firms that such compensation will not be tolerated.
In the end, this is a symptom of a larger problem – a bubble and bust economy that valued reckless speculation over responsibility and hard work. That is what we must ultimately repair to build a lasting and widespread prosperity.”
Let’s see if this makes things better at AIG or worse. Like the Iraq deadline of August 2010, time will tell.
I think you’re right. And I think the politics here is just going to muck things up.