Making Congress READ the Laws They Pass.

D o w n s i z e r - D i s p a t c h --------------------------------------------------------------------------------

Quote of the Day: "There are a thousand striking at the branches of evil to one who is striking at the root." -- Henry David Thoreau

Everyone is wrong about the AIG bonuses.

Democratic Senator Chris Dodd of Connecticut inserted language into the scam-stimulus bill permitting the AIG bonuses that everyone is now bloviating about. He did so at the request of the Treasury Department. A Congressional majority then voted for the Dodd proposal, and President Obama signed it into law. Those upset about the AIG bonuses should focus on the fact that Congress authorized them.

All the Congressional grand-standing about how bad the bonuses are is rank hypocrisy. One of two things is true . . . Either those who voted for the scam-stimulus bill knew about the bonus provision, in which case they ought to be "falling on their own swords," instead of castigating the government-appointed CEO of AIG, or . . .

They didn't know about the bonus provision, in which case they ought to introduce DownsizeDC.org's "Read the Bills Act," so they'll know what they're passing before they cast their votes.

But, the politicians aren't the only guilty parties in this stupid controversy. The American people are also at fault. Here's why:

We're constantly told that Congress doesn't respond to public pressure and that, therefore, what DownsizeDC.org is trying to do won't work. And yet, we see Congress respond to public pressure repeatedly. The only problem is that it's always pressure about the wrong things! The way to prevent problems like the bonus-authorization provision is to pass the "Read the Bills Act" (RTBA).

RTBA is the RIGHT THING about which to pressure Congress! Had RTBA been in effect then a quorum of both the House and Senate would have heard the bonus-authorization provision read, and that reading would have been broadcast on C-SPAN.

EVERYONE WOULD HAVE KNOWN WHAT WAS BEING PROPOSED BEFORE IT WAS PASSED INTO LAW!

If the American people want to rage about something meaningful then they ought to rage about the fact that Congress doesn't read the laws it passes. If the same pressure that's been applied on this trivial bonus issue had been applied on behalf of RTBA then we might already be close to passing RTBA.

I'm going to be blunt, because blunt talk is easily understood. The American people need to stop being immature twits.

We need to stop getting worked up about symbolic trivia and start getting worked up about REAL ISSUES.

Making Congress read the laws they pass is a REAL ISSUE. If you don't like the AIG bonuses Congress authorized then please use our quick and easy Educate the Powerful System to tell Congress to pass the "Read the Bills Act." You can use your personal comments to point out that RTBA would have exposed the Dodd-Obama bonus authorization to public scrutiny BEFORE it was passed into law.

In addition, if you know someone who's been emoting about the AIG bonuses then you might want to forward them this message and politely suggest that they do something MEANINGFUL, like using our system to ask Congress to pass the "Read the Bills Act." Am I being too blunt? I don't think so.

Jim Babka
President
DownsizeDC.org, Inc.

D o w n s i z e r - D i s p a t c h

LET THE REVOLUTION BEGIN!

Thanks for all you do!
Live your values. Love your country.
And, remember: TOGETHER, We can make a DIFFERENCE!

FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

Lying Or Incompetent - Either Way, Geithner Needs to Be Fired.

Huffington Post

by: David Sirota, Political journalist, best-selling author & syndicated newspaper columnist

Posted: March 18, 2009 | 02:36 PM (EST)

I've never been a fan of Treasury Secretary Tim Geithner - he's a Rubinite who has been too close to Wall Street, and too focused on using government power to protect private shareholders. This is the guy who told the Senate that his primary goal in bailing out the financial industry with public money was not to protect the economy or taxpayers, but instead to use our taxpayer dollars to preserve "a financial system that is run by private shareholders [and] managed by private institutions." Despite my strong disagreements with his ideology, only today have I gotten to the point where I think it's clear he needs to be fired. Why? Because today he proved he's either lying to the public or totally incompetent.

Two stories explain why I say this. Here's the first, showing us how Geithner insists he only found out about AIG's bonuses a week ago:

WASHINGTON (CNN) -- A new time line released by White House officials late Tuesday evening reveals the president first learned about the $165 million in AIG bonuses last Thursday...The new time line was released after White House spokesman Robert Gibbs said he was unaware of when President Barack Obama first learned of the bonus controversy and reporters asked that the White House provide a time line. It also shows that Treasury Secretary Timothy Geithner first found out about the bonuses from his staff last Tuesday.

Now here's the Associated Press, refuting this time line:

For months, the Obama administration and members of Congress have known that insurance giant AIG was getting ready to pay huge bonuses while living off government bailouts. It wasn't until the money was flowing and news was trickling out to the public that official Washington rose up in anger and vowed to yank the money back...The situation has the White House and Treasury Secretary Timothy Geithner on the defensive. The administration was caught off guard Tuesday trying to explain why Geithner had waited until last Wednesday to call AIG chief executive Edward M. Liddy and demand that the bonus payments be restructured. Publicly, the White House expressed confidence in Geithner _ but still made it clear he was the one responsible for how the matter was handled.

For the willfully ignorant who would like to pretend that AP is cooking up this story, recall that AP's story isn't even really "news" in that it is merely corroborating what we already know and what has already been widely reported: the AIG bonus contracts being cited by the administration were signed in 2008, and as the 80 percent owner of AIG, the federal government (ie. the Treasury Department and the Obama administration) have had access to the company's books and contracts for many months. Indeed, even if you believe that only the Federal Reserve bank was told about the AIG bonus contracts, recall that Geithner was a top official at the Federal Reserve bank when the AIG bailout was crafted and when AIG was telling the Federal Reserve about its finances and obligations - and the Wall Street Journal reported that Geithner was intimately involved in the AIG bailout (meaning he had access to their books/contracts months ago).

That means either Geithner is lying to the public by pretending he never knew about the AIG bonuses when, in fact he did.* Or, he's egregiously uninformed/incompetent and therefore absolutely unfit to hold one of the most important economic offices in our country.

This comes on top of Geithner and Summers dishonestly insisting that they are unable to stop the AIG bonuses because of Sen. Chris Dodd's (D-CT) executive compensation legislation that exempted AIG-style bonuses from limits. In fact, as the Wall Street Journal and Hill newspaper long ago reported, Dodd's original bill would have limited such bonuses, but Geithner and Summers specifically forced him to water down his bill because it was "too aggressive." And yet somehow, Geithner and Summers would have us believe the weakening of that legislation - and thus the AIG bonuses - is Dodd's fault, not theirs.

When looked at in sum, what you see is a Treasury Secretary that is creating a huge economic credibility gap for the Obama administration. He is, in short, undermining Obama's presidency - and it's time for Geithner to go.

* Arguably even worse is the fact that Obama himself knew about the bonuses before the checks were cut, and did absolutely nothing to stop those checks from being cut - but that's fodder for another post altogether.

UPDATE: AP notes that in January 2009, "Reps. Joseph E. Crowley of New York and Paul E. Kanjorski of Pennsylvania wrote to the Federal Reserve and the Treasury Department pressing the administration to scrutinize AIG's bonus plans and take steps against excessive payments." So even if you believe Geithner didn't know about the bonuses from his previous work, he was specifically asked to do the work that would have revealed those planned bonuses as far back as January. He either obliged and did the due diligence that would have revealed the bonus contracts, or he ignored the request. That means, as I said earlier in this post, he's either lying about having just found out, or he's incompetent and didn't fulfill what should be the minimum amount of due diligence when a Treasury Secretary hands over billions to what is effectively a government-owned company.

LET THE REVOLUTION BEGIN!

Thanks for all you do!
Live your values. Love your country.
And, remember: TOGETHER, We can make a DIFFERENCE!

FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

Treasury Will Make Grab to Recoup Bonus Funds.

March 18, 2009.
by: JONATHAN WEISMAN, NAFTALI BENDAVID and DEBORAH SOLOMON

WASHINGTON -- The Obama administration said Tuesday it would seek to recoup from American International Group Inc. the $165 million in bonuses paid to employees of the bailed-out insurance titan as it tried to contain a national furor over the payments. White House officials are looking to use an executive-pay provision inserted into the recently passed stimulus law. The administration has seized on language that would allow the Treasury secretary to claw back payments if they were "inconsistent with the purpose" of the Troubled Asset Relief Program or "otherwise contrary to public interest."

In a letter to Congress Tuesday, Treasury Secretary Timothy Geithner said the Treasury planned to use the law to deduct the cost of the bonuses from the government's pending $30 billion cash infusion, and will also extract additional penalties from AIG operating funds.

With angry emails and letters pouring into Congress, a number of legislators had earlier expressed support for a special tax on the so-called retention bonuses paid to 73 AIG employees. Recipients of the funds, at AIG's financial-products subsidiary, include 11 people who no longer work for the company.

Senate Finance Committee Chairman Max Baucus (D., Mont.) and Sen. Charles Grassley (R., Iowa), the committee's top Republican, proposed a 35% tax on employees receiving bonuses and another 35% on the firm that paid it. In a move likely to further unnerve banks, the bill would apply to bonuses earned or paid after Jan. 1, 2009, and would cover not just AIG but all companies that received funds from the government's financial bailout fund.

An AIG spokeswoman has repeatedly declined to comment, except to point to AIG CEO Edward Liddy's letter Saturday to Mr. Geithner, in which he said he found the payments "distasteful." Mr. Liddy was appointed by the Bush administration last year.

The bonuses have crystallized public anxiety over the economic downturn and frustration at the government bailouts, creating a firestorm for the White House. President Barack Obama knew he had little power to stop AIG from issuing the bonuses, even as he stood before television cameras and vowed Monday to "block these bonuses," White House officials said.

By the end of the day, the White House acknowledged its limited options. Its back-and-forth response to the scandal poses a potential threat to Mr. Obama's broad agenda -- especially his ability to wrest fresh bailout funds from Congress, lawmakers say. The bonus flap is also another blow to Mr. Geithner, following criticisms concerning his tax history and the launch of his bank bailout revamp.

White House officials say the president's comments Monday reflected his intention to express personal outrage, even if nothing more could be done to block the payouts. He also wanted to start a new legal review of the AIG contracts, the officials say.

Lawmakers received thousands of calls and emails Tuesday about the bonuses paid to executives in the unit that caused AIG's near collapsed. "It smacks of greed, arrogance and worse," said Sen. Sherrod Brown (D., Ohio).

Mike Markey, an electrician in Swanzey, N.H., emailed his representative and both senators to express frustration that lawmakers hadn't acted sooner. "Why don't you people look into these things before you make a law?" he wrote.

"It's not like we're getting a bailout," says Dana Meier, 46 years old, of Rogue River, Ore., who works out of her home for a company that sells supplements for horses and other animals. "Why is AIG allowed to get away with this?"

Some Republicans, while just as angry as Democrats at the bonuses, were less enthusiastic about a tax penalty, with some questioning the propriety and even the legality of interfering with private contracts.

The law generally allows high taxes on bonuses, even for narrowly defined groups of executives, according to legal experts. Directly singling out executives of AIG in legislation might raise a constitutional issue, however, said Robert Cudd, a partner with Morrison & Foerster LLP in San Francisco.

The fact that AIG was set to pay bonuses to employees at the financial-products division wasn't a secret. AIG disclosed the retention payments in May 2008 in a securities filing, and lawmakers routinely criticized them.

"Fed and Treasury officials have coordinated closely on all aspects of the U.S. government's support for AIG during this extraordinary period," a New York Fed spokesman said.

Though the U.S. government controls AIG through an 80% equity stake and as a major lender, it doesn't have legal authority to freeze payments on its own. The U.S. has committed $173.3 billion to AIG, including $70 billion from Treasury's rescue fund.

In negotiating rescues of AIG late last year, some within the government argued the bonuses should be curtailed. Others said that such a move could cause employees to flee and prompt the firm's collapse. Instead, the government looked for other ways to limit executive compensation, including capping severance pay.

AIG set up a committee in November to examine the bonus issue, says one person familiar with the committee. The group included representatives from the Federal Reserve and Ernst & Young, the Fed's auditor. "If they had wanted to reject the bonuses, they had four months to do so," said this person.

Created in 1987, the financial-products business sold insurance-like contracts to cover a variety of risks using the insurer's triple-A credit rating. In 2007, the business recorded a $10.6 billion operating loss, reflecting the falling value of contracts protecting other firms against losses on assets backed by mortgages. The retention packages in question were tied to levels of pay in 2007 that didn't reflect certain losses incurred by the unit, according to company disclosures.

An administration official said that despite having engineered the first two rescues of AIG while president of the New York Fed, Mr. Geithner didn't know about the pending bonuses until last week.

On March 5, just days after AIG received its fourth round of government aid, the New York Fed informed a Treasury official the payments would be made on March 15, according to an administration official. That information wasn't conveyed to Mr. Geithner until last Tuesday, the official said. The next day, Mr. Geithner called Mr. Liddy and had him perform a legal analysis about whether the payments had to be made. Treasury began its own review of whether it could break the contracts.

On Friday, Messrs. Geithner and Liddy conferred again, and the Treasury secretary didn't protest when the AIG chief said the contracts were inviolable.

By the time National Economic Council Director Lawrence Summers appeared on the Sunday morning talk shows, the bonuses were already in the works, said White House spokesman Robert Gibbs. Government lawyers concluded abrogating the contracts would cost more in legal fees than letting the bonuses go forward.

White House officials say the economic team was reflecting the administration's position. But news of the AIG retention bonuses had hit the newspapers that morning, and anger was building. Some Obama advisers said the economists' language needed to be translated into plainer English. On Sunday evening, the president met with his economic and legal team and told them to keep looking for options on the bonuses.

—Sudeep Reddy, John McKinnon, Michael Crittenden and Kelly Evans contributed to this article.

Write to Jonathan Weisman at jonathan.weisman@wsj.com, Naftali Bendavid at naftali.bendavid@wsj.com and Deborah Solomon at deborah.solomon@wsj.com

LET THE REVOLUTION BEGIN!

Thanks for all you do!
Live your values. Love your country.
And, remember: TOGETHER, We can make a DIFFERENCE!

FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.