Tuesday, March 17, 2009

There's More To AIG Than Their Bonuses

The story that (thankfully) won't stop about AIG's $165 million in bonuses has provided another shock to an already repulsed nation. As the media holds on to it, politicians from the President on down are expressing their outrage at the situation. How dare they take those bonuses! The gall! The audacity! The....oh come on now, we knew that they'd go ahead and further enrich themselves with the Fed's our money. If anything, our elected officials should have known this would have happened.

Actually they did:

Sherman told me in an interview today that the Treasury Department wouldn't have to be withholding $30 billion in aid from AIG until the company restructures its bonus payments, because Congress already had given Treasury the authority to prevent those bonuses from being paid.

Referring to the original bailout Congress passed in October, Sherman told me:

We had a provision in there that said Treasury was supposed to establish, by regulation, standards for executive compensation. We required that to be done -- had it been done, it would have been binding, whether [or not] these contracts had been signed earlier. It's entirely within the power of the federal government to have contracts modified [at companies receiving public aid]. Nixon had contracts modified by the federal government. We gave a similar power to Treasury.
Oh but wait you say, in October Bernanke and Hank Paulson were in charge, why would this be anyone but Bush's problem? Well, Geithner and Summers were a problem back then and they still are now. The decisions they make are at odds with what Obama says in front of the cameras and empathize with the traders, not the American people who were bludgeoned by the greed of Wall Street.

It's great that we have people like Cuomo that want to go after these financiers for their bonuses, but we still need to address the systemic problems such as Obama's conservative choices when it comes to dealing with the financial industry. The hard truth is, we still need the change Obama promised as far as Wall Street goes. Until proven wrong, I still see Geithner as part of the problem, not the solution.