The AIG Fiasco

Who's to blame?

ThinkProgress editor Faiz Shakir was on MSNBC to discuss the AIG bonus fiasco. Faiz disputed the right wing attempts to blame Treasury Secretary Tim Geithner for the problems, pointing out that AIG’s bonus contracts were arranged under the Bush administration. He added:

If I’m faulting Geithner for anything, it’s that when he first learned of this, he didn’t take it directly to the American public and use the public anger as a negotiating tool with AIG to get them to renege on some of these bonuses.

The President said:

Speaking to reporters outside the White House this afternoon, Obama took full responsibility for the White House's handling of the bonus issue, as Greg Sargent noted. "Asked if he wished he’d known about the bonuses sooner, Obama said, in the course of answering: 'Ultimately, I’m responsible. I’m the President of the United States…The buck stops with me.'"

What did AIG CEO Gordon Edward Liddy say?

Testifying before Congress today, AIG CEO Gordon Edward Liddy said that the Federal Reserve was aware the bonuses would be paid out and “acquiesced in that decision.” In fact, Liddy claimed that Federal Reserve members were present at AIG’s “compensation committee meetings” with the ability to say “yea or nay”.

But look who originally opposed CEO salary caps and now are condemning the bonues.

Several Republicans who opposed Wall Street salary caps and are now flipping their positions to condemn the bonuses paid by AIG, include:

Sen. Minority Leader Mitch McConnell (R-KY)
Sen. Banking Commitee ranking member Richard Shelby (R-AL)
Rep. Peter King (R-NY)
Sen. Kit Bond (R-MO)
Sen. James Inhofe (R-OK)

The next step:

President Barack Obama said he will seek legal authority over the financial system that will give the federal government power to step into contract issues, such as the one that has allowed American International Group Inc. to pay out $165 million in retention bonuses to employees of the tottering insurance giant's financial products group.