Rep. Sherman: Treasury Could Easily Get Back Those AIG Bonuses

[antimatter98]

Source: Talking Point Memo

Rep. Brad Sherman (CA), a senior Democrat on the House Financial Services Committee, told TPMDC today that the Obama administration could have prevented excessive bonuses from being paid out at AIG -- but it missed the chance.

Sherman told me in an interview today that the Treasury Department wouldn't have to be withholding $30 billion in aid from AIG until the company restructures its bonus payments, because Congress already had given Treasury the authority to prevent those bonuses from being paid.

Read more: http://tpmdc.talkingpointsmemo.com/2009/03/rep-sherman-treasury-could-easily-get-back-those-aig-bonuses.php?ref=fp1

---

Question is, why did Geithner, and for that matter, Larry Summers who was Clinton's Treasury Secy., let this get past them?

[Thrill]

1. It was Paulson not Geithner's treasury who gave AIG their first TARP money

So how the hell is he trying to put this on the Obama administration? Thats when the restrictions should of been put on, by Paulson. I love how Congress always passes shitty legislation and tries to blame the administration for the loopholes, they put in.

[SharonAnn]

6. It wasn't TARP money. It was the Federal Reserve. Different bailout.

[Thrill]

7. Still. It was done under the previous administration

And this Democrat is trying to pin it on the Obama admin.

[AzDar]

2. 'Tis but my humble opinion of course, but it seems Geithner and Summers are part of

the problem, not the solution.

[pinto]

3. Apparently this refers to the October funds, under the aegis of Bush's Treasury Sec., Paulson.

Yet, he makes the point that the Obama administration didn't use the power retroactively, but has chosen to use it's power on any further funding. And he notes that the bonuses are a *relatively* small portion of those funds, referring to the banks that got much of the October bailout funding, as revealed this weekend. ~ pinto

Referring to the original bailout Congress passed in October, Sherman told me:

"We had a provision in there that said Treasury was supposed to establish, by regulation, standards for executive compensation. We required that to be done -- had it been done, it would have been binding, whether these contracts had been signed earlier. It's entirely within the power of the federal government to have contracts modified . Nixon had contracts modified by the federal government. We gave a similar power to Treasury."

Sherman voted against the bailout, he explained, because he didn't believe that Treasury would use the power given to it by Congress. As it turned out, the department ultimately exercised its executive compensation powers last month, but the final regulations were riddled with loopholes -- and only applied to companies receiving "extraordinary" assistance from the government in the future, a standard that no company has officially met so far.

<snip>

But Sherman also counseled wariness, as the nation gives in to expend anger over AIG's bonuses and largely ignores the weekend disclosure of the large banks who benefited because of their status as AIG counterparties in credit default swaps deals.

"Arguably, this thing with bonuses is a red herring they're throwing at us did with the $170 billion" they've received from the U.S. government, Sherman said. "The bonuses are chump change compared with what's going to the uninsured counterparties."

http://tpmdc.talkingpointsmemo.com/2009/03/rep-sherman-treasury-could-easily-get-back-those-aig-bonuses.php?ref=fp1

[bemildred]

4. "The bonuses are chump change compared with what's going to the uninsured counterparties." nt

[bertman]

5. The level of manipulation by these financial elites is mindboggling. Sadly, Rep. Sherman

is probably right about the "shiny, jingly keys" aspect of this bonus brouha--which is a legitimate response to this insane compensation issue.

These guys are masterful at focusing attention WHERE THEY WANT IT. And, of course, the media is more than willing to oblige.

It will be interesting to see how this plays out. Even if President Obama doesn't nationalize AIG per se, maybe he will start bringing these bastards to heel.

[earcandle]

8. Good Question!

[w4rma]

9. Fire Geithner and Summers. They are both corrupt DLCers/Rubinites. (nt)

[No Elephants]

10. Sherman is claiming that Congress authorized the Fed to make regulations

regarding executive compensation. Sherman further asserts that the Fed could therefore have blown up the contractual obligations, no matter when the contracts had been made. I am not so sure. The federal government would have been retroactively depriving someone of a valuable contractual right. Not giving the TARP money to anyone if there were undisclosed outstanding claims might have been better.

This is Buscho's mess, but Congress was not on its toes. Again. Just like the Iraq War Resolution and the 911 Perps War Resolution.

I still want to know if the law of fraudulent conveyances could be applied.

[Taverner]

11. I like KO's idea of taxing them 100% on those bonuses