WASHINGTON (CNNMoney.com) – Treasury Secretary Tim Geithner said on Thursday that he had no choice but to pay top dollar to business partners of troubled insurer AIG to avert a deeper financial panic last year.
Geithner defended regulators' actions to prop up American International Group (AIG, Fortune 500) with $62.1 billion that was essentially funneled to 16 banks that were counterparties to AIG insurance contracts.
"I don't understand why this is so complicated," Geithner told the Congressional Oversight Panel at a hearing on Capitol Hill. "You either prevent default, because default would be cataclysmic – or you don't. If you selectively default on any, the thing will come crashing down."
NEW YORK (CNNMoney.com) – The CEO of bailed-out insurer American International Group told Congress Wednesday that it has made "substantial" progress in its restructuring efforts, but lawmakers said they wanted more to show for it.
"We are hearing, 'Trust us,' but we are not willing to let $180 billion go just on trust," said Rep. Edolphus Towns, D-N.Y., chairman of the House Oversight Committee. "We will question; we will inquire; we will verify."
Chief Executive Edward Liddy, who said AIG is diligently working toward paying back its government bailout, described the company's plan for paying back billions of taxpayer dollars.
"We continue to weigh every decision regarding the restructuring with several criteria in mind," Liddy said. "Will this action facilitate a reduction in systemic risk? Is this action the best use of the federal assistance we are receiving? Will this action enhance our ability to pay back the government?"
"The restructuring efforts ... are a reflection of this thought process," he added.
(CNN) – There's new evidence today that Senator Chris Dodd is in political trouble back home in Connecticut.
Only one out of three Connecticut voters questioned in a Quinnipiac University poll released Thursday approve of the job Dodd's doing as senator, his lowest approval rating ever. Fifty-eight percent disapprove of how Dodd's handling his duties, up 14 points from last month.
The five term Democratic senator is up for re-election in November of next year and the poll indicates that Dodd trails former Republican Congressman Rob Simmons, a potential Republican challenger, 50 percent to 34 percent. Dodd trailed Simmons were basically deadlocked in Quinnipiac's poll from early last month.
Matched against two other possible Republican challengers, the poll suggests that Dodd trails both State Sen. Sam Caligiuri by four points and former ambassador Tom Foley by eight points.
Fifty-nine percent of those questioned say they will definitely or probably vote against Dodd in 2010.
Ed Henry, CNN's senior White House correspondent, got a tough answer from President Obama when he asked Tuesday night why Obama waited days to express outrage on the AIG bonuses. "Because I like to know what I'm talking about before I speak," Obama said. Here's Henry's take on what happened.
WASHINGTON (CNN) - The most amazing part of the exchange to me is that I didn't go into the East Room intending to ask President Obama about AIG.
After frantic preparation for the prime-time newser with several colleagues, especially lead CNN White House producer Tim McCaughan, I had several provocative questions in my pocket.
But none of them had much to do with the financial crisis because I assumed several of my colleagues would exhaust the topic of AIG before my turn came up.
At the first presser in February, I was about the 10th reporter the president called on. The economy had been chewed over so I went with a "sidebar" question about whether Obama, given his push for transparency, would overturn the policy at Dover Air Force Base preventing media coverage of coffins returning from Iraq and Afghanistan.
It was a surprise line of inquiry. The president made news by saying the policy was under review - and a few weeks later he overturned it.
I was heading into this event with the same strategy: make news on something unexpected (I won't tell you which topics I was working on cause it would ruin the surprise for a future presser or interview with the president).
But on Tuesday night, as I sat in the front row nervously reviewing my hypothetical questions written out in longhand (decidedly old school), I kept thinking back to a conversation I had with Wolf Blitzer Saturday night at the Gridiron dinner.
WASHINGTON (CNN) – The populist wave that swept Capitol Hill last week against controversial bonuses paid to AIG executives stalled Monday after the White House and several key senators raised concerns about legislation to heavily tax the bonus payments.
"In light of concerns raised by President Obama and Senate Republicans we need additional time to discuss next steps," Jim Manley, a spokesman for Senate Majority Leader Harry Reid of Nevada said late Monday.
In response to the criticism, Senate Finance Committee Chairman Max
Baucus, D-Montana, who angrily denounced the AIG bonuses last week, said he's been talking to White House officials and to other senators about changing the bill he introduced just Friday.
"I want to hear what senators have to say. A lot are weighing in now with different ideas," Baucus said. "Some are tax. Some are regulatory. But they're still all addressing bonuses."
Baucus said he does not know when his bill - which appeared to be on a fast track last week - will be considered by the Senate.
On Sunday, President Barack Obama said on the CBS News program "60 Minutes" that, "You don't want to be passing laws that are just targeting a handful of individuals."
Democratic sources told CNN that statement was a subtle public warning that was privately delivered to Senate Democrats in a much more direct way.
WASHINGTON (CNN) – Michigan Gov. Jennifer Granholm told President Barack Obama to ignore persistent Republican criticism that he is trying to do too much in a time of economic crisis and, instead, urged the new president to tackle the nation’s health care costs as part of a larger effort to get the economy back on track.
“I think he should do it,” Granholm said when asked whether Obama should forge ahead with health care reform even if doing so meant more taxes or more deficit spending in the current tough economic times.
“It is part of the economy. If you look at the manufacturing sector, one of the huge costs on that sector is health care,” the governor said, noting the impact that health care costs are having on her state’s automotive industry. “It is part of the economic malaise that this country is feeling. So they need to fix that.”
In the wake of Obama’s efforts late last week to tamp down growing controversy over $165 milllion in bonuses paid to AIG employees, Granholm also highlighted a growing sense of a double standard in Michigan.
(CNN) – Treasury Secretary Tim Geithner sat alone at the witness table answering questions and getting an earful from a panel of senators.
Sen. Kent Conrad, D-N.D., chairman of the Senate Budget Committee, cautioned Geithner that Americans were crazy angry about corporate bailouts.
"I have never - in the 22 years I've been here, I've never seen such anger, with the sense of betrayal, that people in positions of responsibility took advantage of them," said Conrad. "The outrage of people cannot be dismissed."
That was on March 12. It turns out, the next day was when American International Group would award $165 million in bonuses to some 400 employees.
Over the past week, Congress turned the anger over AIG into legislation. The House rushed through a bill to tax bonuses, and the Senate made a similar proposal.
(CNN) - Twenty state attorneys general announced investigations Friday into the $165 million bonuses paid by insurance giant AIG last week, with Connecticut's top lawyer issuing subpoenas to CEO Edward Liddy and 11 other executives.
Connecticut Attorney General Richard Blumenthal and the Democratic chairman of the General Assembly's Banks Committee want Liddy and other executives to appear Thursday and bring with them "original or copies of documents regarding the AIG Financial Products Corp. retention bonus plan and any related contracts or agreements."
"Now living off supersized taxpayer-paid bonuses, these AIG employees have a moral and legal obligation to appear at this legislative hearing and disclose details about corporate compensation to employees as well as investment decisions by AIG Financial Products Corp. involving credit derivatives and dealings that have led to market destruction," said Blumenthal, a Democrat.
AIG officials are citing a Connecticut law to justify their payment of the bonuses. The law says that employees can sue in civil court for payments withheld that are due them and recoup double the amount of money. Many AIG employees live in Connecticut.
WASHINGTON (CNN) - Senate Banking committee Chairman Christopher Dodd told CNN Wednesday that he was responsible for language added to the federal stimulus bill to make sure that already-existing contracts for bonuses at companies receiving federal bailout money were honored.
Dodd acknowledged his role in the change after a Treasury Department official told CNN the administration pushed for the language.
Both Dodd and the official, who asked not to be named, said it was because administration officials were afraid the government would face numerous lawsuits without the new language.
Dodd, a Democrat, told CNN's Dana Bash and Wolf Blitzer that Obama administration officials pushed for the language to an amendment designed to limit bonuses and "golden parachutes" at those companies.
"The administration had expressed reservations," Dodd said. "They asked for modifications. The alternative was losing the amendment entirely."
On Tuesday, Dodd denied to CNN that he had anything to do with adding the language, which has been used by officials at bailed-out insurance giant AIG to justify paying millions of dollars in bonuses to executives after receiving federal money.
Updated 6:54 p.m.
WASHINGTON (CNN) - Senate Banking committee Chairman Christopher Dodd told CNN’s Dana Bash and Wolf Blitzer Wednesday that he was responsible for adding the bonus loophole into the stimulus package that permitted AIG and other companies that received bailout funds to pay bonuses.
On Tuesday, Dodd denied to CNN that he had anything to do with the adding of that provision.