September 18th, 2008
02:55 PM ET
13 years ago

GOP lawmakers take Treasury, Fed to task for AIG bailout


[cnn-photo-caption image= caption="Key Republicans blasted the Treasury Department Wednesday."]
WASHINGTON (CNN) - Key Republicans on Capitol Hill Wednesday blasted the Treasury Department and the Federal Reserve for orchestrating an $85 billion bailout of insurance giant American International Group.

The criticism came a day after lawmakers were surprised by the news that taxpayers would again be called on to shore up a member of the struggling financial sector.

"Once again the Fed has put the taxpayers on the hook for billions of dollars to bail out an institution that put greed ahead of responsibility and used their good name to take risky bets that did not pay off," said Sen. Jim Bunning, R-Kentucky, a member of the banking committee.

A spokesman for Sen. Richard Shelby of Alabama, the top Republican on the banking committee, said the senator "profoundly disagrees with the decision to use taxpayer dollars to bail out a private company" and is upset the government has sent an inconsistent message to the markets by bailing out AIG after it just refused to save investment bank Lehman Brothers from bankruptcy.

"The American taxpayer should not be asked to unwillingly assume the inordinate risks that financial experts knowingly undertook, particularly when taxpayer exposure is increased by the ad hoc manner in which these bailouts have been engineered," said Shelby's aide, Jonathan Graffeo.

A top House Republican, Rep. Roy Blunt of Missouri, complained about not getting advance notice of the bailout and said House Republicans are struggling to "understand a coherent strategy" about which firms get rescued and which ones don't.

Rep. Adam Putnam of Florida, the third-ranking Republican in the House, said the cost is "unnerving" and called on the Treasury Department and Federal Reserve "to dispatch an envoy to the Hill to bring members of Congress up to speed."

"The communications lines are not operating efficiently," he said.

Late Wednesday, the White House agreed to send a top Bush economic advisor and an official from the Fed to brief House Republicans Thursday, according to a House GOP aide.

Meantime, congressional Democrats placed the blame for the crisis squarely on the Bush administration, arguing it failed to aggressively regulate the financial industry.

"The most recent bailout initiated by the Bush administration - that of AIG - is just another example that George Bush is a failed manager," said House Speaker Nancy Pelosi, D-California. "Because of the inattention, or a decision on their part to have crony capitalism in our country, Americans across the country are feeling the pain of this."

Pelosi said two House committees will investigate the recent bailouts "to tell us how we can avoid this in the future, what went wrong here and also to look into this issue of fraud and mismanagement" at AIG.

White House spokeswoman Dana Perino said Congress could have done more to head off the crisis.

"I think that Congress needs to take - before they start throwing arrows - take a little bit of time for some self-reflection. But also, why don't we just set that aside for a minute and focus on the fact that we have a crisis that we're trying to manage."

Senate Majority Leader Harry Reid - who also complained that he didn't know a bailout of AIG was in the works - said Congress won't change laws immediately to address the rapidly unfolding financial crisis because "no one knows what to do."

"We are in new territory here," Reid added. "You could ask (Federal Reserve Chairman Ben) Bernanke, you could ask (Treasury Secretary Henry) Paulson. They don't know what to do but they are trying to come up with ideas."

He said he will keep the Senate in session through the end of the year so committees can hold hearings and start writing legislation that he said could become law next year.

"It's a multitrillion-dollar issue that's facing America and we can't do it in some timeline that is unrealistic," Reid said.

Filed under: Capitol Hill
soundoff (52 Responses)
  1. Darryl

    The sad story is that somebody got PAID. One of Bush Boy's GOT PAID..

    Check the Bank here and off shore.. AIG, and the BUSH Connect is laughin all the way to the bank..

    The sad think is we can touch them. Homeland Security and all the too in the shad can't figure out where's the money.. just go to south Texas the have to replace their boats...

    September 18, 2008 05:52 pm at 5:52 pm |
  2. ROMNEY 2012

    We so needed Mr McCain to pick Mitt Romney. He would have a plan to take care of the economy. I am worried that Sara will not be able to deal with the economy or with our foreign troubles. I am afraid it will be Obama this time. So I say "ROMNEY 2012".

    September 18, 2008 05:54 pm at 5:54 pm |
  3. ran

    Too little way too late. But the CEO of this and the other bail outs will run with their multi-millions to some far away country and live happily ever after. If the gov. was really outraged they would not allow the money to go to the CEO or other top exec.

    We the people can help make sure this does not happen again by electing Obama/Biden and other Democrats this time.

    September 18, 2008 05:56 pm at 5:56 pm |
  4. john

    well what happen to our money now??????????!!!!!!!!!!!! gop crooks ate that money and left the country

    September 18, 2008 05:58 pm at 5:58 pm |
  5. Independent but Leaning

    This country controlled By Obama, Pelosi and Reid... woo hoo, break me off a slice of that. Do you people have any idea how far to the left these folks are?

    A Dem congress with moderate McCain as president will already be a significant change in course.

    And if you think McCain is 4 more years of Bush, then you are very politically uneducated and need to do some homework and think for yourself.

    Change course, but don't drive this country off of the map.

    September 18, 2008 05:59 pm at 5:59 pm |
  6. d


    September 18, 2008 05:59 pm at 5:59 pm |
  7. Independent but Leaning


    the officers of Fannie and Freddie, who did get their millions, are top Obama campaign officials. Please folks, do your homework.

    September 18, 2008 06:01 pm at 6:01 pm |
  8. Freedom Loving Patriot (God fearing too!)

    It's not to late John. You could CHANGE YOUR MIND AGAIN and say "I really want Romney as my VP. Sarah was just some more of my "self-depricating humor", ha-ha.

    September 18, 2008 06:02 pm at 6:02 pm |

    WHY NOW? Are the Republicans going against what they voted for?
    Why Now? Are the Republicans trying to separate from their own
    Why did John McCain vote 95% of athe time for Bush, but does not mention his name now!!!!

    September 18, 2008 06:02 pm at 6:02 pm |
  10. Freedom Loving Patriot (God fearing too!)

    Let me spell it out for you


    September 18, 2008 06:03 pm at 6:03 pm |
  11. No to Dictator wannabe Obama

    Headline: November 5th, 2008

    President John McCain

    Vice President Sarah Palin

    Thank you America for saying no to Cuban Type Dictatorship wannabe Barack Obama!

    September 18, 2008 06:03 pm at 6:03 pm |
  12. Dave G, Minneapolis

    oh, both parties are complicit. But actually no one can control the economy and the government shouldn't even try. Neither candidate can offer a balanced budget but they feel they can offer advice on how the economy should be handled or companies regulated? No Way, No How, No Democrats, No Republicans.

    These two parties have created the mess. Only the Libertarian Party has a platform to decrease government spending, reduce taxes and eliminate all of these taxpayer funded loans and bailouts. Let the free market prevail. I don't pay taxes to shore up AIG in the hopes that they will pay back the loan in two years...where's the guarantee that we won't be bailing them out in two years? Same thing for the Mortgages; if people cant pay their mortgage, a 6 month moratorium on paying the bill would not help, just delay the inevitable.

    Why can't McBama / Obacain get the picture that we need Leadership? Starting with balanced budget.

    September 18, 2008 06:03 pm at 6:03 pm |
  13. john

    wow GOP?!!!!!!!!!!!!! what a joke gop is. ask MCCAIN what happen to our money he will tell you uhhhhhh ohhhhhh uhhhhhh ohhhhhh our friends took it and ran out of the country.

    September 18, 2008 06:04 pm at 6:04 pm |
  14. Freedom Loving Patriot (God fearing too!)


    It was Bush's laisse-fair economic policy. I could hear it now...

    "Let's see if we could run the clock out on this one boy's. And when Obama takes office, the ecomony will tank and he'll take the hit"

    September 18, 2008 06:05 pm at 6:05 pm |
  15. Independent but Leaning

    And I trust that you guys know that in the last 10 years only ONE senator took more money from Fannie and Freddie than Obama (who has only been there for 3 years). He took more in 3 years than 98% of the guys around him took in 10 years!! Wake up people and quit drinking the kool-aid.

    Yes, the #1 guy was also a Democrat. Look it up. It's a fact.

    September 18, 2008 06:07 pm at 6:07 pm |
  16. ephra

    Don't help the banks, help the people, impress somebody.

    September 18, 2008 06:11 pm at 6:11 pm |
  17. Independent but Leaning

    Also- where was your precious Democrat controlled congress while this was going on? The committee chairpersons who were charged by the people to specifically monitor these institutions- asleep at the wheel- encouraging high risk loans to low income buyers. There's plenty of blame to go around here, but the fact is Congress is charged with matters of commerce.

    It's a good thing we turned the legislative keys over to Pelosi and Reid- just think how far this will go when Obama is rubber stamping their folly.

    September 18, 2008 06:11 pm at 6:11 pm |
  18. maurice

    People are more worried about paying an extra buck a gallon then
    or national security.Wake up people!

    September 18, 2008 06:11 pm at 6:11 pm |
  19. Linda K.

    About Obama's experience. He was a community organizer (which is a big deal) for two years. He led the Harvard Law Review and graduated magna cum laude. He taught constitutional law at the University of Chicago and practiced as a civil rights attorney. During his years in the Illinois state senate he proposed hundreds of pieces of legislation to help the people of Illinois. Since being elected to the U.S. Senate in 2004, he has pushed through bills for transparency in government and non-proliferation, or reduction of nuclear weapons worldwide, among other things.

    On top of this, his judgment is excellent. He called for a timetable for withdrawal in Iraq before Bush decided this was a good idea, and he called for negotiation rather than armed confrontation with enemies.

    These are his accomplishments that I've commted to memory. There are many others.

    September 18, 2008 06:13 pm at 6:13 pm |
  20. Marj,Paso Robles, Cal

    All roads lead to Congress, folks. Both Dems and Repubs are to blame for this mess. Clinton AND Bush administrations FAILED to properly regulate. Fannie and Freddie are Govt. agencies-our tax dollars went to bail out stupid and greedy individuals. All Govt't agencies involved should be taken to task for their roll in this fiasco. You can't put a 'D' or an 'R' on this one; ALL are to blame. Our government has FAILED us for the last 18 years.

    September 18, 2008 06:14 pm at 6:14 pm |
  21. Larry

    Amazing New's Flash, Trump supports Mc-insane...hahahahahahahahaha.

    September 18, 2008 06:16 pm at 6:16 pm |
  22. CA gal on the left coast

    Look at all these hipocritical finger-pointers. If the current lame duck president hadn't lied his way into getting congress to enter this Iraq mess, the country wouldn't be in this historic deficit debt, the economy wouldn't be bankrupted, and the country's wealth wouldn't be squandered for some oil-war based on falsehoods and corruption.
    What a crock of lies.

    September 18, 2008 06:53 pm at 6:53 pm |
  23. Peter (CA)


    Fannie and Freddie were NOT government agencies. They were private enterprises before this fiasco.

    I agree with you that both sides are complicit in this mess but when the Republicans run the White House and the Congress and make the laws, they have to take the blame.

    The Democrats have controlled the House for 20 months, the Senate is 49-49. They propose legislation; Bush vetoes it, not enough votes for an override.

    Republican rancor is hollow.

    September 18, 2008 07:14 pm at 7:14 pm |
  24. oscar

    what do you expect? trump suporting someone who will tax him? no way! Expect same from tight-fisted millioniares who will not like to be taxed.

    September 18, 2008 07:16 pm at 7:16 pm |
  25. Harold from Canada

    forget it......

    September 18, 2008 07:32 pm at 7:32 pm |
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