[Congressional Record Volume 155, Number 50 (Tuesday, March 24, 2009)]
[Senate]
[Pages S3671-S3672]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. INHOFE:
  S. 680. A bill to limit Federal emergency economic assistance 
payments to certain recipients; to the Committee on Banking, Housing, 
and Urban Affairs.
  Mr. INHOFE. Mr. President, last week Congress was consumed in 
expressing its justified outrage over the bonuses for AIG executives. 
The House passed a bill that would tax those bonuses at 90 percent to 
get the money back. The Senate may consider something similar this 
week, and I think it is the Senate's job to proceed carefully as we do 
so. Though I think all of us would support taking back the payments, we 
need to give due consideration to the means by which we do this. The 
constitutionality of the House version is certainly questionable at 
best.
  Now, the reason many are seeking expedited consideration of the AIG 
bonus bill is clear enough--to cover up the past mistakes of the 
majority party and the Treasury Secretary. We should recall the process 
that created the stimulus bill: No time to review the final bill before 
passage, a photo op masquerading as a conference committee, hasty 
consideration, no bipartisan input, and huge decisions about billions 
and billions of dollars being made behind closed doors by the majority. 
It was this process that allowed the provision to give out the AIG 
bonuses to find its way into law. There was a provision very deep in 
the Democratic stimulus bill that allowed these bonuses to be paid, and 
it was inserted at the behest of Treasury Secretary Tim Geithner.
  This gets us to the root of the problem: The bailout approach that 
Secretary Geithner epitomizes. The American people object to the 
midnight rescue packages, the ad hoc approach, the ``say one thing, do 
another'' programs. There is a complete lack of any policy framework, 
explanation of principles or coherent approach in dealing with our 
financial situation. I believe there is a lack of any transparency 
whatsoever and a seeming indifference to the taxpayers' interests.
  Now, the $700 billion bailout bill last October was congressional 
ratification of Tim Geithner's approach to big banks: to bail them out. 
I objected to that at that time and I was in shock that 75 Members of 
the Senate voted to give an unelected bureaucrat, without any 
constraints, $700 billion to do with as he wished. Now, that was bad 
enough. It all started with Bear Stearns a year ago. The initiator of 
the Bear Stearns deal was not Secretary Paulson, it was not Chairman 
Bernanke, it was the--they signed off on it, but it was Timothy 
Geithner. After the deal was announced, Robert Novak reported in his 
column that an unnamed Federal official confided in him at the time: 
``We may have crossed

[[Page S3672]]

a line'' in bailing out Bear Stearns. Mr. Novak wrote that was an 
understatement and that we wouldn't know the ramifications of this 
decision for a long time.
  Well, I think we better understand those ramifications today. We are 
now trillions of dollars past that line and we are beginning to 
comprehend the course on which that decision has set us. I, personally, 
believe that trillions of dollars past that line, we are no better off. 
That is enough. Tim Geithner's bailout approach has taken us too far. 
Instead of Congress using the AIG bonus issue to cover up Tim 
Geithner's mistakes in allowing those bonuses, we should take it as an 
opportunity to fundamentally reevaluate the bailouts thus far and put 
an end to any more bailouts. Now, with the revelations of how AIG is 
being used to funnel money to foreign banks to make them whole on bad 
investments at the expense of the U.S. taxpayers, we need to put an end 
to the Geithner approach on bailouts. The taxpayers deserve no less.
  The debate over the AIG bonuses, though extremely important, only 
scratches the surface of some much deeper issues. First, the furor over 
AIG bonuses obscured some other, perhaps more important, news about the 
AIG bailout regarding counterparties--or creditors--counterparties, to 
some of AIG's more exotic transactions. Second, the AIG bonus issue 
reveals a significant problem with Treasury Secretary Tim Geithner's 
bailout approach to failing financial institutions.
  Under Tim Geithner, the $150 billion in taxpayer money AIG has 
received is being used to funnel money to AIG's counterparties, mostly 
big investment banks and foreign banks. Taxpayers are right to be angry 
about the bonuses, but they should be even angrier about how their 
taxpayer dollars used to bail out AIG are being distributed by them. 
Under the contracts AIG entered into with other big banks and foreign 
banks, AIG needs to come up with billions and billions of dollars when 
their investments are downgraded. Now, that is where all the AIG 
bailout money is going. AIG is basically being used as a front to 
funnel taxpayer moneys into large foreign banks that are taking no 
loss--no loss--on their investments. It is the taxpayer who is bearing 
the loss that these banks should have been able to take. Treasury 
Secretary Geithner needs to explain to the American people why foreign 
banks are getting 100 percent on their investment while the American 
people are taking the loss. Why can't any of these banks take a haircut 
on their AIG investments?
  Now, I guess it is hard to explain to people because it doesn't sound 
believable, but what is happening is we have foreign banks--and I will 
name a few of them in a second--that have put their money into an 
investment into AIG. They planned to make a profit. If they had made a 
profit, I dare say they wouldn't have come back to say to our United 
States of America: We will write you a check for the profit we made. 
Instead of that, they wait until they take a loss, and then the 
American taxpayers have to come in.
  I think the American people are getting completely fleeced on their 
$150 billion AIG investment. Secretary Geithner needs to explain to us 
why relatively healthy firms such as Goldman Sachs aren't taking any 
loss on a clearly bad investment in AIG. Why are all these foreign 
banks getting 100 percent of their investment at the expense of the 
U.S. taxpayer?
  Here is a sample of the banks that are getting made whole by U.S. 
taxpayers--that is our taxpayers--people who elect us to office: The 
Bank of Montreal, Canada, $1.1 billion; the Societe Generale, France, 
$11.9 billion; investments made by a French bank. This is a French bank 
that bought an interest in AIG, they lost their money, they come back 
to us, and we pay them back for their loss. The BNP Paribas, $4.9 
billion; the Deutsche Bank in Germany, $11.8 billion; the ING, 
Netherlands, $1.5 billion; Barclays, of the UK, $8.5 billion. This is 
just a sampling of the over $50 billion that foreign banks have gotten 
from AIG. In other words, $50 billion in taxpayers' money has gone to 
foreign banks. I don't think many people have caught on to that yet. 
The taxpayers are picking up the tab. Meanwhile, some U.S. banks are 
getting the same treatment. Goldman Sachs has received $12.9 billion. 
These are all investments in AIG. Merrill Lynch, $6.8 billion; Bank of 
America, $5.2 billion; Citigroup, $2.3 billion. All told, the U.S. 
banks have gotten around $45 billion through AIG from the U.S. 
taxpayer. What is interesting, as bad as it is that U.S. banks are 
getting back $45 billion for bad investments, the foreign banks are 
actually getting back more than the U.S. banks are. Not one of these 
banks I have mentioned has taken a dime of loss in their AIG 
investments--not one. AIG's counterparties have been made whole across 
the board by the U.S. taxpayer. Why is that? Why can't any of these 
banks take any of the loss on their AIG investment? Why is the taxpayer 
being asked to bear the full cost of all these bad investments? The 
American taxpayers have a right to know and Secretary Geithner needs to 
explain this.
  I say this because I know people are outraged in my State of Oklahoma 
about the fact that there have been bonuses that have been made, but 
this is even far worse than that was. The American people are getting 
completely fleeced on their $150 billion AIG investment, $700 billion 
bailout of Wall Street, and billions in ad hoc bailouts, of which we 
have still not seen the end. Only this week, Secretary Geithner has 
announced that the Government will work with private investors to 
purchase between $500 billion and $1 trillion of toxic assets.
  Now, at this point I would say, remember back when we were being sold 
a bill of goods, I voted against it, but 75 percent of the Senate voted 
for it--$700 billion to be given to an unelected bureaucrat to do with 
as they wished. We all remember that. What was that supposed to be used 
for? The bad part of the bill was not just the amount of money; there 
were no guidelines, no accountability. That was supposed to be used to 
buy toxic assets. I could quote right now things they said at that 
time: This money has to be spent for toxic assets, and if you don't do 
that, the whole country is going to go down and we are going to have 
another depression again. So the President's budget includes a 
placeholder for billions in additional banking bailouts. The American 
people have said enough a long time ago. We have to put an end to the 
Geithner approach on bailouts.
  Looking back since last fall, more and more I feel I may have been 
overly critical of Secretary Paulson, at least when compared to 
Secretary Geithner. Geithner's handling of the $700 billion Wall Street 
bailout has been worse than Paulson's. Whether it is Paulson or 
Geithner, handing $700 billion over to an unelected bureaucrat to do 
with what he pleases is bad enough when three-fourths of the Senate 
voted to do it last October, and it is an even worse idea with Tim 
Geithner at the helm. What has happened with the taxpayers' investment 
in AIG is clear evidence of that. No matter how you look at it, it has 
been a bad deal for the U.S. taxpayers.
  Now, in light of all of this, I have introduced legislation to do 
more than deal with the bonuses. This is S. 680, just introduced. S. 
680 gets to the root of this problem. Of the $150 billion we have 
already given to AIG, it is my understanding that there is $30 billion 
more for AIG from TARP that has been agreed to by the Treasury 
Secretary but has not yet been drawn down. My legislation would prevent 
that from going forward. The taxpayers have given AIG about $150 
billion so far. I think it is completely reasonable to say that once a 
single company gets $150 billion from the taxpayers, it should be cut 
off from getting more. There has to be a point beyond which Government 
cannot go, and there has to be an end to the road that is fleecing 
American taxpayers. This provides that end.
  There is no other vehicle out there to do it. I can tell my 
colleagues right now, if this isn't brought up and voted on, the 
taxpayers of America are going to put another $30 billion into AIG to 
be used to pay off foreign banks. This is the only way we can stop it 
is with this legislation, so I encourage the leadership to help us 
bring this up for a vote. I can assure my colleagues it would pass with 
an overwhelming majority. That is S. 680, the only vehicle out there 
that would keep AIG from using taxpayer money to pay off other foreign 
banks.
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