[Congressional Record Volume 155, Number 152 (Tuesday, October 20, 2009)]
[House]
[Page H11464]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


            THE AIG BONUS DEBACLE: THE HEADACHES KEEP COMING

  The SPEAKER pro tempore (Ms. Edwards of Maryland). The Chair 
recognizes the gentleman from Florida (Mr. Stearns) for 5 minutes.
  Mr. STEARNS. Madam Speaker, the Special Inspector General for the 
Troubled Asset Relief Program, Neil Barofsky, recently released an 
alarming audit which revealed Secretary of the Treasury Tim Geithner's 
complete lack of oversight and total mismanagement of American 
International Group's (AIG) distribution of millions in bonus payments 
following the company's $180 billion taxpayer bailout.
  Just think about this: U.S. taxpayers own 80 percent of AIG, and AIG 
is using taxpayer money to pay themselves huge bonuses. Let's examine 
Mr. Geithner's role as Secretary of the Treasury and his role with AIG.
  Mr. Geithner, as we will recall, was President of the Federal Reserve 
of New York prior to becoming Secretary of the Treasury in January of 
this year. Interestingly enough, on September 29, 2008, during Mr. 
Geithner's time as president, AIG officials briefed a senior vice 
president at the New York Fed about the details of AIG's deferred 
compensation plan, bonuses, and retention payments for its Financial 
Products group. AIG even e-mailed the New York Fed official copies of 
its compensation plans. Mr. Geithner was president of the New York Fed 
at the time the bank knew about the bonuses, and yet he maintains that 
he was ``not apprised of the specifics.''
  Please, Mr. Secretary, just admit you knew about the bonuses and you 
were just trying to protect your friends on Wall Street at taxpayers' 
expense.
  Now let's fast forward to March of this year. Mr. Geithner is now 
Secretary of the Treasury, and the news breaks to the American people 
about AIG--the company that is ``too big to fail,'' and in need of $180 
billion in taxpayer bailout--would be distributing $165 million in 
retention payments to employees of its financial products subsidiary. 
Now, this unit, I will remind everybody, of course, is the same entity 
responsible for writing the credit default swap policies that 
contributed directly to the company's near collapse. Yet again, we have 
Secretary Geithner claiming that he only found out about the AIG 
bonuses on March 10, 2009, just 3 days before they were paid.
  Please, Mr. Secretary, if a company is in bankruptcy, you don't give 
out bonuses.
  Given that sources at the Federal Reserve have stated that ``Treasury 
staff was informed that the March 15 bonus payment date was upcoming,'' 
surely Mr. Secretary, as head of the U.S. Department of the Treasury, 
you must have known about the payments. It is even harder to believe in 
light of the Special Inspector General's report which notes ``Federal 
Reserve Board of New York officials e-mailed the Treasury's internal 
counsel, legal counsel, the amounts and timing of the AIG financial 
products retention award'' plan.
  So even his legal counsel knew about it.
  Madam Speaker, everybody at the Federal Reserve knew about the AIG 
bonus issue, and officials at the Treasury surely knew. Yet somehow, 
the head of our Treasury Department and former head of the New York Fed 
at the time of the AIG bailout, said he was completely in the dark.
  Please, Mr. Secretary, just admit you knew all the about the bonuses.
  Mr. Barofsky's audit concludes that ``This, coupled with Treasury's 
subsequent limited communications with the Federal Reserve Board of New 
York with respect to executive compensation, has meant that the 
Secretary of the Treasury invested $40 billion of taxpayers' funds in 
AIG, designed AIG's contractual executive compensation restrictions and 
helped manage the government's majority stake in AIG for several 
months, all without having any detailed information about the scope of 
AIG's very substantial, and very controversial, executive compensation 
obligations.''
  Please, Mr. Secretary.
  It should also be noted that former Secretary Paulson was also 
complicit in the AIG bonus mismanagement. It was under Mr. Paulson's 
watch, after all, that the government acquired this huge stake in AIG 
in the first place. And it was Mr. Paulson's decision to bail out AIG, 
which happened to owe billions to Goldman Sachs, while subsequently 
letting Goldman Sachs' main competitor, Lehman Brothers, fail.
  The American people were rightly outraged when they found out that 
AIG would be paying out millions in bonuses despite needing a $180 
million taxpayer bailout. But it doesn't stop there. The audit also 
revealed that even kitchen assistants and elevator operators got 
bonuses over $7,000. So clearly, not all of the AIG bonuses were 
contractually obligated as the company's executives claim. The 
headaches just keep coming.
  This is what happens when high-ranking government officials such as 
Mr. Paulson and Mr. Geithner have clear conflicts of interest and are 
trusted to manage billions in taxpayers' money. Mr. Paulson and Mr. 
Geithner's close ties to Wall Street are just too close for comfort for 
the American people and their tax dollars.

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