Outrage over bonuses puts focus on senators

Light shed on AIG as a political cash cow --WASHINGTON, 03/18/09 by Jerry Zremski — Congressional Democrats vowed Tuesday to strip away the $165 million in bonuses that American International Group paid to its executives with taxpayer bailout money. In doing so, they threatened to bite one of the many hands that feed the Washington campaign money machine. ⁂ “One way or another, we’re going to try to figure out how to get these [bonus] resources back,” said Sen. Christopher J. Dodd, D-Conn., chairman of the Senate Banking Committee. ∴ Dodd has accepted $280,238 in campaign cash from AIG’s political committee and employees in the last 20 years.

Sen. Charles E. Schumer, D-N. Y., said: “If they don’t give the money back, we will put in place a new law that will allow us to tax these bonuses at a very high rate so that it is returned to its rightful owners — the taxpayers.” ∴ Schumer has accepted $111,875 from AIG donors over two decades.

“They’re not going to get the financial benefit of those bonuses,” said Senate Finance Committee Chairman Max Baucus, D-Mont. ∴ Baucus collected $90,000 from those connected to the insurance giant that has received more than $170 billion in federal bailout funds.

As news of the bonuses rocked official Washington, AIG’s longtime connections to prominent politicians went largely unmentioned — except by Massie Ritsch, communications director of the Center for Responsive Politics, who posted details of the campaign contributions on the group’s Web site this week. “It’s hard to take politicians seriously as they wag their fingers at companies like AIG when for so many years, they’ve accumulated so much money from these companies,” he said.

Tuesday, though, there was plenty of finger-wagging.

New York Attorney General Andrew M. Cuomo said AIG paid bonuses of $1 million or more to 73 employees at its Financial Products Division, which created the exotic “credit default swaps” whose failure made the company the largest recipient of federal bailout money. Eleven of the bonus recipients no longer work for AIG.

Cuomo subpoenaed information to determine whether the payments, which the company made over the last weekend, are fraudulent. Contracts written last year guarantee the performance bonuses for 2008 “despite obvious signs that 2008 performance would be disastrous in comparison to the year before,” Cuomo said.

In addition, Cuomo said he has subpoenaed the names of those who received the bonuses, and the Obama administration may do the same thing.

“I think the specific proposal about making public those names is something that the administration is looking at,” White House spokesman Robert L. Gibbs said.

The Obama administration also defended Treasury Secretary Timothy F. Geithner, who, in the view of some Republicans, let AIG get away with paying the bonuses.

“I don’t know if he should resign over this,” said Sen. Richard C. Shelby, R-Ala. “He works for the president of the United States. But I can tell you, this is just another example of where he seems to be out of the loop. Treasury should have let the American people know about this.”

Gibbs said President Obama continues to have confidence in Geithner, although the White House spokesman quickly added that the administration wants to work with Congress to recoup the bonuses.

Obama was one of four people who ran for the presidency who ranked in the top five of recipients of AIG employee and political committee donations over the last two decades. He pulled in $107,332, mostly for his presidential race.

Ritsch said presidential candidates routinely and understandably raise far more money from corporate sources than do lawmakers.

What’s important to note, he said, was that AIG was able to get away with so much while giving so much to the nation’s top politicians and parties—$9 million in 20 years.

“The indignation they’re showing now would have been helpful along the way as this company took unnecessary risks while flying under the regulatory radar screen,” he said of the federal officeholders.

Schumer was the only politician who has not run for president who ranked among AIG’s top five beneficiaries. Asked for comment, Schumer spokesman Max Young noted that Schumer has long called for increased financial regulation of companies such as AIG.

“Virtually all the contributions were made over five years ago, and nothing has been contributed since taxpayers needed to step in to save this company from itself,” Young said. “He hasn’t accepted donations since, and will not.”

The White House did not respond to a request for comment on the issue of AIG donations.

While significant, the AIG donations pale in comparison to those of the biggest sources of campaign cash — AT&T and the Association of Federal, State and County Employees, which each gave four times as much as AIG did to federal officeholders over the last 20 years.

The AIG contributions had a distinctly New York cast to them, with 10 prominent politicians from the state each receiving more than $10,000 from the company or its employees.

On top of that, former U. S. Sen. Alfonse M. D’Amato, RN. Y., signed on as an AIG lobbyist in 2005. Federal records show that D’Amato’s lobbying firm racked up $52,000 in expenses lobbying for the company, a pittance compared with the $47.73 million AIG spent on lobbying over the last five years.

Lawmakers from both parties are aflame with anger over the $165 million in bonuses.

Sen. Charles E. Grassley, RIowa, suggested in a radio interview Monday that AIG executives should do like failed Japanese business executives and either quit or kill themselves.

Grassley clarified his comments Tuesday, saying he didn’t literally want AIG employees to consider hari-kari.

Other members of Congress were content to merely try to get the bonus money back.

“The hardworking people of Western New York, taxpayers across the nation and members of Congress are united in our visceral disgust for AIG’s complete disregard for the taxpayer dollars we trusted them to spend prudently,” said Rep. Brian Higgins, D-Buffalo.

Higgins and Rep. Eric J. J. Massa, D-Corning, were among the lawmakers who co-sponsored bills aimed at taxing AIG in a way that would, in effect, make the company pay the bonuses back to the government. “The American public demands action,” Massa said, “and that’s why I am working to get these out-of-control AIG executive bonuses back.”

News wire services contributed to this report. jzremski@buffnews.com Read the full story at the Buffalo News...