March 18th, 2009
02:14 PM ET
5 years ago

Barney Frank: Ownership issue key to recouping AIG bonuses

On Wednesday's 'American Morning,' Rep. Barney Frank, who chairs the House Finance Committee, shared what was legally and legislatively within the government's power on recovering the AIG bonuses.
On Wednesday's 'American Morning,' Rep. Barney Frank, who chairs the House Finance Committee, shared what was legally and legislatively within the government's power on recovering the AIG bonuses.

(CNN) – As the tide of outrage over AIG bonuses continued unabated Wednesday, a congressional committee became the epicenter of the issue as Edward Liddy, CEO and chairman of the troubled insurer, prepared to answer questions about executive bonuses.

On Wednesday's "American Morning," Rep. Barney Frank, who chairs the House Finance Committee, shared what was legally and legislatively within the government's power on recovering the AIG bonuses and reforming the whole financial incentive system.

Watch: Bonuses not deserved, Frank says

Kiran Chetry, CNN anchor: When he appears before your committee today, what type of assurances are you guys seeking from Mr. Liddy with regard to these bonuses?

Rep. Barney Frank, D-Massachusetts: Well, I don't have a lot of confidence in Mr. Liddy's view at this point. When he said that first he couldn't get the money back because they had contractual rights but also that he was worried about not retaining them, it left me unconvinced he's really going to be trying.

CNN's Lisa Desjardins and John Lisk reveal what's ahead for AIG on Capitol Hill.


To subscribe to this podcast, go to cnn.com/podcast.

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Filed under: AIG • Barney Frank
March 18th, 2009
02:01 PM ET
5 years ago

Bonuses allowed by stimulus bill

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Democratic leaders scrambling to strip AIG executives of bonuses are having a hard time answering a key question: Why didn't Congress act to prevent the bonuses in the first place.
Democratic leaders scrambling to strip AIG executives of bonuses are having a hard time answering a key question: Why didn't Congress act to prevent the bonuses in the first place.

WASHINGTON (CNN) – Democratic leaders scrambling to strip AIG executives of bonuses are having a hard time answering a key question: Why didn't Congress act to prevent the bonuses in the first place.

"There's always more we can do, and hindsight is 20/20," said Senate Majority Leader Harry Reid Tuesday.

But though some lawmakers did move to prevent bonuses in the stimulus bill last month, the final language actually makes an exception for pre-existing contracts, effectively exempting AIG.

Senate Banking Committee Chairman Chris Dodd, D-Connecticut, who originally proposed the executive compensation provision, said he did not include the exemption clause, which said new rules "shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009."

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Filed under: AIG
March 18th, 2009
01:11 PM ET
5 years ago

Obama defends treasury secretary, lambasts AIG bonuses

President Barack Obama defended his treasury secretary Wednesday, saying that no one in the Obama administration had been Responsible for supervising ailing insurance giant AIG.
President Barack Obama defended his treasury secretary Wednesday, saying that no one in the Obama administration had been Responsible for supervising ailing insurance giant AIG.

WASHINGTON (CNN) – President Barack Obama defended his treasury secretary Wednesday, saying that no one in the Obama administration had been Responsible for supervising ailing insurance giant AIG.

Tim Geithner "is making all the right moves in terms of playing a bad hand," the president said.

"There has never been a secretary of the treasury, except maybe Alexander Hamilton, right after the Revolutionary War, who has had to deal with the multiplicity of issues that Secretary Geithner's having to deal with," he said.

The president spoke to reporters just outside the White House as he prepared to depart on a trip to California.

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Filed under: AIG • President Obama
March 18th, 2009
11:30 AM ET
5 years ago

Lawmakers defend role amid AIG bonus backlash

(CNN) – As outrage over American International Group bonuses spreads and finger-pointing continues, lawmakers are trying to convince the public that it isn't their fault.

Senators and representatives are vowing to get the bonus money back, but questions have risen why didn't Congress act to prevent the bonuses in the first place?

"Well, the only lever we have in this is the fact that these corporations have come to the Congress of the United States and want a taxpayers' bailout," Sen. Chuck Grassley, R-Iowa, said Wednesday on CNN's "American Morning."

"If it weren't for that, we would not have any leverage on how any individual corporation is being run, and we don't pretend to have any leverage on any corporation today in the United States that's not seeking federal help," said Grassley, the top Republican on the Senate Finance Committee.

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Filed under: AIG • Barney Frank • Charles Grassley
March 18th, 2009
11:00 AM ET
5 years ago

AIG's political donations

(CNN) - As Congress grills AIG's chief executive Wednesday, here's a look at the top ten political recipients of AIG donations for the 2008 election cycle, according to the Center for Responsive Politics.

The top ten recipients of AIG donations for the 2008 election cycle:

Sen. Chris Dodd, D-Connecticut: $103,100
President Barack Obama: $101,332
Sen. John McCain, R-Arizona: $59,499
Secretary of State Hillary Clinton: $35,965
Sen. Max Baucus, D-Montana: $24,750
Former presidential candidate Mitt Romney: $20,850
Vice President Joe Biden: $19,975
Rep. John Larson, D-Connecticut: $19,750
Sen. John Sununu, R-New Hampshire: $18,500
FormerpPresidential candidate Rudy Giuliani: $13,200


Filed under: AIG • Congress
March 18th, 2009
10:01 AM ET
5 years ago

AIG's Liddy: 'I share that anger'

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Edward Liddy, chief executive of bailed out insurer American International Group, will tell Congress Wednesday that he found the company's controversial bonuses 'distasteful,' but necessary because of legal obligations and competition.
Edward Liddy, chief executive of bailed out insurer American International Group, will tell Congress Wednesday that he found the company's controversial bonuses 'distasteful,' but necessary because of legal obligations and competition.

WASHINGTON (CNNMoney.com) – Edward Liddy, chief executive of bailed out insurer American International Group, will tell Congress Wednesday that he found the company's controversial bonuses "distasteful," but necessary because of legal obligations and competition, according to a written copy of his testimony.

"We have to continue managing our business as a business - taking account of the cold realities of competition," Liddy will tell the House Financial Services subcommittee. The hearing is set to begin at 10 a.m.

"Because of this, and because of certain legal obligations, AIG has recently made a set of compensation payments, some of which I find distasteful," he added.

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Filed under: AIG
March 17th, 2009
08:19 AM ET
5 years ago

Borger: Where's the White House's tipping point?

WASHINGTON (CNN) – When the White House first got wind of the executive bonuses at American International Group, the disbelief was palpable.

"You smack your head and you say 'You've gotta be kidding me,' " senior presidential adviser David Axelrod tells me. "It put another brick on the load we're carrying."

Or a concrete block.

Just as the White House readies its long-awaited plan to bail out the banks - having presented its plans for housing and small business - a new wave of anger is precisely what it doesn't need. And to make matters worse, it's a widespread anger that is not grounded in the more ordinary resentments between economic classes.

In fact, this new populism is almost unanimous: The banks were greedy and reckless. They took us down with them. So why do the bad guys deserve a government cushion?

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Filed under: AIG • David Axelrod • President Obama
March 16th, 2009
04:05 PM ET
5 years ago

Congress looking for ways to recoup AIG bonuses

The House Financial Services Committee, chaired by Rep. Barney Frank, is taking a look at the bonuses being paid to AIG employees.
The House Financial Services Committee, chaired by Rep. Barney Frank, is taking a look at the bonuses being paid to AIG employees.

WASHINGTON (CNN) - Outraged House Democrats are scrambling to figure out what, if anything, they can do to recoup the $165 million in bonuses AIG awarded to employees after the company received $170 billion in federal bailout funds.

A House Democratic leadership aide and a House financial services committee aide said Congress is trying to shame AIG executives and employees into forgoing the bonuses while investigating possible legal avenues that can be used to force AIG to return the money used for bonuses.

The House financial services committee is trying to determine if Congress can force AIG to renegotiate the bonuses the company says it is legally required to give employees as dictated by contracts negotiated before it received its first infusion of bailout dollars in September, according to the committee aide.

Both aides said it is unclear what authority Congress has to force AIG to take back the bonuses. Complicating the issue is the fact that the first infusion of cash to AIG was authorized by the Federal Reserve before Congress passed the $700 billion Trouble Asset Relief Program, which included some restrictions on executive pay.

AIG CEO Edward Liddy will face intense questioning about the bonuses when he testifies Wednesday before the House Financial Services subcommittee on capital markets.


Filed under: AIG • Congress
March 16th, 2009
10:12 AM ET
5 years ago

Congress to grill AIG executive

Liddy will be in the  hot seat on Capitol Hill later this week.
Liddy will be in the hot seat on Capitol Hill later this week.

WASHINGTON (CNNMoney.com) – Lawmakers outraged about the bailout of American International Group will get another forum Wednesday, when the company's CEO is set to go before a House panel probing the government's involvement in the embattled insurer.

Edward Liddy, the AIG chief executive, is sure to be grilled about $160 million in bonuses paid to senior employees last week.

AIG has received three bailout packages, totaling more than $170 billion, in large part because it had issued risky credit default swaps - a kind of insurance for bad loans made by banks and investment companies.

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Filed under: AIG • Congress
March 15th, 2009
05:21 PM ET
5 years ago

AIG's insistence on bonuses raises ire in Washington

In a letter to the White House, AIG Chairman Edward Liddy, shown here in December, vows to curb bonuses.
In a letter to the White House, AIG Chairman Edward Liddy, shown here in December, vows to curb bonuses.

(CNN) - White House officials and some members of Congress reacted strongly Sunday to news that insurance giant AIG had intended to pay out $165 million in bonuses and compensation. The company has received at least $170 billion in federal bailout money.

Under pressure from the Treasury, AIG scaled back the bonus plans and pledged to reduce 2009 bonuses - or "retention payments" - by at least 30 percent. That did little to temper outrage at the initial plan, however.

"There are a lot of terrible things that have happened in the last 18 months, but what's happened at AIG is the most outrageous," Lawrence Summers, head of the National Economic Council, told ABC's "This Week."

"What that company did, the way it was not regulated, the way no one was watching, what's proved necessary, it is outrageous."

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Filed under: AIG
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