Dems call for AIG takeover; GOP looks to ditch bailout
By: Susan Ferrechio
Chief Congressional Correspondent
March 18, 2009
Though the outrage is bipartisan on Capitol Hill over the $165 million bonus payout by American International Group, the solutions are not.
Republicans are touting the incident as proof that the government should get out of the bailout business, while Democrats are using the public outcry to push more government regulation and intervention, including a plan to take over AIG.
When House Financial Services Committee Chairman Barney Frank, D-Mass., walked out of his hearing room Tuesday afternoon, he told reporters “it’s time for us to take over the company.”
Frank wants the government, which thanks to the $170 billion bailout issued to AIG last fall has an 80 percent stake in the company, to assert its ownership rights and demand the bonuses be repaid, taking the matter to court if necessary.
Frank said AIG Chief Executive Officer Edward Liddy’s explanation that he had to pay the bonuses in order to retain employees convinced him of the need for the government to step in and run the insurance giant.
“That leads me to question his judgment very seriously,” Frank said.
Republicans on Tuesday morning lambasted the administration for poor handling of the bailout money, pointing to a March 2 transcript in which White House press secretary Robert Gibbs asserted that Obama knew where the bailout money given to AIG and other financial institutions had been spent.
House Minority Whip Eric Cantor, R-Va., said the bonus flap puts a spotlight on excessive government spending and involvement in rescuing private companies.
“We have a concern of continued government intrusion into the markets with a real lack of accountability to protect the taxpayers,” Cantor said.
House Speaker Nancy Pelosi, D-Calif., did not directly endorse Frank’s takeover proposal.
She announced Tuesday that the House would take up a bill this week “enabling taxpayers to recoup misspent public dollars from companies, such as American International Group. ...”
The House is considering several possibilities, including authorizing U.S. Attorney General Eric Holder to recover “prior and future excessive compensation payments” made by companies bailed out by the government. The House is also considering a bill that would tax the AIG bonuses, a proposal the Senate is also weighing.
Sen. Harry Reid, D-Nev., sent a letter to AIG asking them to “renegotiate the contracts that include these appalling bonuses.” If AIG refuses, Reid said, the Senate will move legislation that would subject the bonuses to “severe tax penalties” of up to 90 percent.
Reid is also proposing greater regulation, saying he plans to completed a wide-ranging “Wall Street accountability bill” in the near future that will “ensure that these abuses never happen again.”
Republicans were less interested in reform proposals and more concerned with government accountability.
Senate Minority Leader Mitch McConnell, R-Ky., said he wanted the Treasury Department to explain why it gave AIG an additional $30 billion in bonus money earlier this month “and didn’t have any idea that this outrage was going to occur.”
