Two chief executives with much on the line in the furor over Wall Street bonuses President Obama and Edward M. Liddy of the American International Group made concerted efforts on Wednesday to tamp down the populist anger, but faced continued outrage on Capitol Hill and elsewhere.
At a highly charged Congressional hearing, Mr. Liddy said he had asked employees making more than $100,000 a year who just shared in a $165 million bonus payout to give half the money back, reflecting the public and political disgust at the idea of rewarding the same people who had helped drive the company and the economy into distress.
"Some have already volunteered to give back 100 percent," said Mr. Liddy, who was installed by the Federal Reserve when it rescued A.I.G. last September and is being paid $1 a year. But he did not provide any details, and resisted releasing the names of those who had received the bonuses, saying some employees had received death threats.
Mr. Obama, at the White House, said his goal was to "channel our anger in a constructive way" and called for legislative authority to take over and close troubled nonbank financial institutions like A.I.G.
Even as he said that "nobody here" had drafted the bonus deals A.I.G. agreed to last year, the president said he took responsibility for cleaning up the mess, deflecting some of the criticism being directed at Treasury Secretary Timothy F. Geithner and trying to limit any damage to his ability to get more money from Congress for bank bailouts.
"The buck stops with me," Mr. Obama said. "And my goal is to make sure that we never put ourselves in this kind of position again."
But furious Democratic leaders in Congress said they would not wait for A.I.G. to act on good faith, and instead said they would head to the House floor on Thursday with a bill to tax 90 percent of bonuses paid out since Jan. 1 by A.I.G. or any other company that had accepted more than $5 billion in government bailout funds.
The House speaker, Nancy Pelosi, at a hastily called news conference with Representative Charles B. Rangel of New York, the chairman of the tax-writing Ways and Means Committee, and other leaders, said Congress would do what was necessary to assure that taxpayers did not pay for bonuses.
"This money doesn’t belong to A.I.G.," said Representative Steve Israel, Democrat of New York. "It belongs to the American taxpayer and we are going to get it back." Senate leaders have proposed legislation that would impose a 35 percent tax on recipients of the A.I.G. bonuses, and a 35 percent tax on the company. House leaders said that they had kept the White House informed of their plans, but that the administration had not been involved in developing the legislation.
Faced with demands for disclosure of the names of the people who received the bonuses, Mr. Liddy said hesitantly at the Congressional hearing, before a subcommittee of the House Financial Services Committee, that he would be willing to supply the names, but only if they were not released publicly. He explained that there had been death threats, and read an example: "All the executives and their families should be executed with piano wire around their necks," it said. "That is our only hope."
The committee’s chairman, Representative Barney Frank, Democrat of Massachusetts, said he was dismayed to hear about the threats, but he was unwilling to guarantee the confidentiality of the names. He warned that if he did not get the information, he would try to have Mr. Liddy subpoenaed. "I think the time has come for the federal government to assert greater ownership rights," Mr. Frank said.
Likewise, the New York attorney general, Andrew M. Cuomo, signaled that he would make the names public when he received them in response to a subpoena.Another uproar could emerge if Fannie Mae and Freddie Mac, the mortgage-finance giants that have been taken over by the government and have received billions in taxpayer money, pay similar retention bonuses to top executives, as they have indicated that they would do in recent regulatory filings.
As Congress sought to tighten its grip on A.I.G. and other companies aided by the taxpayers, Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Senate banking committee, sought to explain how legislation aimed at limiting executive compensation at firms receiving bailout help was changed at the last minute to allow certain bonuses that were contained in employment contracts before Feb. 11, 2009.
Mr. Dodd initially said he did not know how that change was made to the compensation limits that were included in the economic recovery bill adopted by Congress last month. But in an interview Wednesday with CNN, he said that the Treasury Department had requested the change and that his staff had helped to write it into the bill, as part of a deal to keep other pay limits in the legislation.
"It was their suggestion," Mr. Dodd told CNN. "We wrote it together at the time." But it is far from clear that the change mattered in the case of A.I.G. The payouts have roused particular fury because they went to employees of A.I.G.'s financial products unit the part of A.I.G. that dealt in the credit derivatives that were its downfall.
A horde of cameras and reporters awaited Mr. Liddy outside the hearing room, subjecting him to the sort of gantlet reserved for major felons and celebrities after an unfortunate night out.But Mr. Liddy, who chatted with protesters as he entered the session for hours of testimony, repeatedly tried to make clear that he was not responsible for getting A.I.G. into this mess.
"Six months ago I came out of retirement to help my country," said Mr. Liddy, a former Allstate executive who no doubt has questioned that decision on more than one occasion."At the government's request I've had the duty and extraordinary challenge of serving as chairman and chief executive officer of American International Group, or A.I.G."
Representative Paul E. Kanjorski, the Pennsylvania Democrat who is chairman of the subcommittee, sought to make the distinction clear as well, saying that Mr. Liddy had responded to a plea to help out and should be spared any abuse."We do not intend to harass you,Mr. Kanjorski said.Yet members of both parties sharply questioned Mr. Liddy.
"This is like the captain and the crew of the ship reserving the lifeboats saying to hell with the passengers," said Representative Stephen F. Lynch, Democrat of Massachusetts.To Mr. Liddy, Mr. Lynch’s observation went too far."I take offense, sir,” he responded, reminding lawmakers that he was not in charge when the bonuses were arranged but believed he was legally bound to pay them.
“Well, offense was intended,” Mr. Lynch retorted. “So you take it rightfully, sir.”In response to questions about who in the federal government A.I.G. consulted with on its business decisions, Mr. Liddy said that he normally spoke with the Fed, and believed the Fed then kept the Treasury in the loop. The Fed has appointed three trustees to represent the government’s stake in A.I.G., but when asked their names Mr. Liddy could not recall them.He said it was his impression that Mr. Geithner had not known about the bonuses until two weeks ago.
At a highly charged Congressional hearing, Mr. Liddy said he had asked employees making more than $100,000 a year who just shared in a $165 million bonus payout to give half the money back, reflecting the public and political disgust at the idea of rewarding the same people who had helped drive the company and the economy into distress.
"Some have already volunteered to give back 100 percent," said Mr. Liddy, who was installed by the Federal Reserve when it rescued A.I.G. last September and is being paid $1 a year. But he did not provide any details, and resisted releasing the names of those who had received the bonuses, saying some employees had received death threats.
Mr. Obama, at the White House, said his goal was to "channel our anger in a constructive way" and called for legislative authority to take over and close troubled nonbank financial institutions like A.I.G.
Even as he said that "nobody here" had drafted the bonus deals A.I.G. agreed to last year, the president said he took responsibility for cleaning up the mess, deflecting some of the criticism being directed at Treasury Secretary Timothy F. Geithner and trying to limit any damage to his ability to get more money from Congress for bank bailouts.
"The buck stops with me," Mr. Obama said. "And my goal is to make sure that we never put ourselves in this kind of position again."
But furious Democratic leaders in Congress said they would not wait for A.I.G. to act on good faith, and instead said they would head to the House floor on Thursday with a bill to tax 90 percent of bonuses paid out since Jan. 1 by A.I.G. or any other company that had accepted more than $5 billion in government bailout funds.
The House speaker, Nancy Pelosi, at a hastily called news conference with Representative Charles B. Rangel of New York, the chairman of the tax-writing Ways and Means Committee, and other leaders, said Congress would do what was necessary to assure that taxpayers did not pay for bonuses.
"This money doesn’t belong to A.I.G.," said Representative Steve Israel, Democrat of New York. "It belongs to the American taxpayer and we are going to get it back." Senate leaders have proposed legislation that would impose a 35 percent tax on recipients of the A.I.G. bonuses, and a 35 percent tax on the company. House leaders said that they had kept the White House informed of their plans, but that the administration had not been involved in developing the legislation.
Faced with demands for disclosure of the names of the people who received the bonuses, Mr. Liddy said hesitantly at the Congressional hearing, before a subcommittee of the House Financial Services Committee, that he would be willing to supply the names, but only if they were not released publicly. He explained that there had been death threats, and read an example: "All the executives and their families should be executed with piano wire around their necks," it said. "That is our only hope."
The committee’s chairman, Representative Barney Frank, Democrat of Massachusetts, said he was dismayed to hear about the threats, but he was unwilling to guarantee the confidentiality of the names. He warned that if he did not get the information, he would try to have Mr. Liddy subpoenaed. "I think the time has come for the federal government to assert greater ownership rights," Mr. Frank said.
Likewise, the New York attorney general, Andrew M. Cuomo, signaled that he would make the names public when he received them in response to a subpoena.Another uproar could emerge if Fannie Mae and Freddie Mac, the mortgage-finance giants that have been taken over by the government and have received billions in taxpayer money, pay similar retention bonuses to top executives, as they have indicated that they would do in recent regulatory filings.
As Congress sought to tighten its grip on A.I.G. and other companies aided by the taxpayers, Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Senate banking committee, sought to explain how legislation aimed at limiting executive compensation at firms receiving bailout help was changed at the last minute to allow certain bonuses that were contained in employment contracts before Feb. 11, 2009.
Mr. Dodd initially said he did not know how that change was made to the compensation limits that were included in the economic recovery bill adopted by Congress last month. But in an interview Wednesday with CNN, he said that the Treasury Department had requested the change and that his staff had helped to write it into the bill, as part of a deal to keep other pay limits in the legislation.
"It was their suggestion," Mr. Dodd told CNN. "We wrote it together at the time." But it is far from clear that the change mattered in the case of A.I.G. The payouts have roused particular fury because they went to employees of A.I.G.'s financial products unit the part of A.I.G. that dealt in the credit derivatives that were its downfall.
A horde of cameras and reporters awaited Mr. Liddy outside the hearing room, subjecting him to the sort of gantlet reserved for major felons and celebrities after an unfortunate night out.But Mr. Liddy, who chatted with protesters as he entered the session for hours of testimony, repeatedly tried to make clear that he was not responsible for getting A.I.G. into this mess.
"Six months ago I came out of retirement to help my country," said Mr. Liddy, a former Allstate executive who no doubt has questioned that decision on more than one occasion."At the government's request I've had the duty and extraordinary challenge of serving as chairman and chief executive officer of American International Group, or A.I.G."
Representative Paul E. Kanjorski, the Pennsylvania Democrat who is chairman of the subcommittee, sought to make the distinction clear as well, saying that Mr. Liddy had responded to a plea to help out and should be spared any abuse."We do not intend to harass you,Mr. Kanjorski said.Yet members of both parties sharply questioned Mr. Liddy.
"This is like the captain and the crew of the ship reserving the lifeboats saying to hell with the passengers," said Representative Stephen F. Lynch, Democrat of Massachusetts.To Mr. Liddy, Mr. Lynch’s observation went too far."I take offense, sir,” he responded, reminding lawmakers that he was not in charge when the bonuses were arranged but believed he was legally bound to pay them.
“Well, offense was intended,” Mr. Lynch retorted. “So you take it rightfully, sir.”In response to questions about who in the federal government A.I.G. consulted with on its business decisions, Mr. Liddy said that he normally spoke with the Fed, and believed the Fed then kept the Treasury in the loop. The Fed has appointed three trustees to represent the government’s stake in A.I.G., but when asked their names Mr. Liddy could not recall them.He said it was his impression that Mr. Geithner had not known about the bonuses until two weeks ago.
For more news: http://www.nytimes.com/2009/03/19/business/19bailout.html?bl&ex=1237608000&en=ed559a97685bac75&ei=5087%0A
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