[Congressional Record (Bound Edition), Volume 155 (2009), Part 19]
[House]
[Pages 25160-25161]
[From the U.S. 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

[[Page 25161]]

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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