Obama and Congress scramble on AIG bonuses

(Originally published 3/21/09)

AIG has paid $165 million in performance bonuses -- including 73 bonuses of more than $1 million each this year -– to its employees since U.S. taxpayers forked over $170 billion in federal assistance and took ownership of nearly 80 percent of the company late last year.

The American public, most of whom are getting a $13/week "bailout" from Uncle Sam in return for their sinking savings and evaporating home values, pounced like angry piranha on this latest Wall Street affront.

Federal lawmakers and stammered with incredulity. President Barack Obama was even caught up in the wrath, giving himself over to stronger-than-usual rhetoric: "Where's the outrage?" Lawmakers demanded to know, how this could happen?

And that's where the story gets interesting. Journalists dug into the bailout bill and found language that answered their question: Lawmakers not only allowed those bonuses; they specifically protected them.

U.S. Sen. Christopher "It wasn't-a-sweetheart-Countrywide-mortgage" Dodd (D-Conn.), who chairs the Senate Banking Committee and had a personal hand in writing the bailout bill, insisted for two days that he didn't write the language.

Well, actually, he admitted later, he did ... but it wasn't his idea.

It was all the Obama Administration, he said; it was all Treasury Secretary Tim Geithner.

The rhetoric softened. The bonuses were still offensive –- even stunning, Obama said, but the government had to protect them because Treasury Department officials feared lawsuits if they weren't paid.

Folks, I'm no economist. But it seems to me that if the government is forced to bail out your company to keep the entire American economy from foundering, your performance is less than bonus-worthy. But I digress.

After realizing that they had no one to blame for the bonus mess but themselves, congressmen who voted for the bailout furiously haggled over whether it was better to sue to recoup the money or just to tax it at ... oh, say, 90 percent.

SIDEBAR: Lawmakers supposedly allowed the bonuses to avoid getting sued, but now they want to sue to get it back. I love irony; don't you? END SIDEBAR

Appearing on "The Tonight Show with Jay Leno" Thursday, Obama was charming and engaging –- so much so that most viewers probably didn't realize that he apparently opposes recouping the bonuses at all.

"The immediate bonuses that went to AIG are a problem," the president said, "but the larger problem is we've got to get back to an attitude where people know enough is enough and people have a sense of responsibility."

And as for taxing it?

"I understand Congress's frustration," he said. "But the best way to handle this is to make sure you close the door before the horse gets out of the barn. What happened here was that the money's already gone out and people are scrambling to try to find ways to get back at them."

In that analogy, the money is the horse, and taxpayers are left to clean up the barn.

Obama told Leno that over the next several months, he wants to make sure "that we don't lurch from thing to thing" on the economy.

Funny thing, that word "lurch." It means to roll or tip abruptly, or to stagger.

... Kind of like what lawmakers have been doing on AIG all week.