AIG Bonus Outrage Heads To The Hill The AIG bonus battle rages on Capitol Hill today, with the CEO of the insurance giant facing withering criticism from heated lawmakers. But how much can the administration really do about it? Tony Cox talks with Sherrilyn Ifill and Robert George.
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AIG Bonus Outrage Heads To The Hill

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AIG Bonus Outrage Heads To The Hill

AIG Bonus Outrage Heads To The Hill

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TONY COX, host:

From NPR News, this is News & Notes. I'm Tony Cox. Insurance giant AIG has paid out big-bucks bonuses - to the tune of $165 million - after receiving taxpayer bailout money in the billions to stay afloat. Outraged Senate leaders say they want it all back. Plus, former Vice President Dick Cheney says President Obama has made the United States less safe. And do we approve? A new Pew poll says the president's popular support is slipping away. Joining me now to analyze the week's political news is Sherrilyn Ifill, a civil rights lawyer and law professor at the University of Maryland Law School, and Robert George, associate editorial page editor for the New York Post. Sherrilyn, Robert, nice to have you.

Prof. SHERRILYN IFILL (Law, University of Maryland Law School; Civil Rights Lawyer): Glad to be here.

Mr. ROBERT GEORGE (Associate Editorial Page Editor, New York Post): Good to be here, Tony. Thank you.

COX: All right. We've got a lot to talk about, so let's jump right into it; $165 million, that's what people are arguing about today, a House Financial Services Subcommittee hearing into how and why the nearly bankrupt company AIG paid those bonuses. In a prepared statement before the subcommittee, AIG's Chairman Ed Liddy called the payouts, quote, distasteful. And yesterday, angry lawmakers said they would retrieve the funds. Here's Senator Charles Schumer.

Senator CHARLES SCHUMER (Democrat, New York): My colleagues and I are sending a letter to Mr. Liddy informing him that he can go right ahead and tell these employees that are scheduled to get bonuses that they should voluntarily return them because if they don't, we plan to virtually tax all of it. He should tell these employees if they don't give the money back, we'll put in place a new law that will allow us to tax these bonuses at a very high rate so that it's returned to its rightful owners, the taxpayers.

COX: We'll get into whether or not they can do that in just a moment. But first, Robert, as you would expect, the finger-pointing has begun already, where - over where the clause in the stimulus bill allowing these bonuses to be paid, where that actually came from. Who wrote it? For example, Senator Chris Dodd, chairman of the Senate Banking Committee, says, no, I didn't write it. The president says he didn't have anything to do with it, nor did Tim Geithner. The question is, why didn't anybody see it, or did they?

Mr. GEORGE: Well, that's the question. It's like that comic strip, you know, the "Family Circus," where the kid Not Me is the one that everybody's pointing to. This is the crux of the question. It's that classic D.C. question of who knew what and when. You've got - the real big problem is that the bonus structure - the basic structure of it was known going back to last fall, when the first part of the AIG bailout was put forward. And as far as we knew, the Treasury, then under Hank Paulson, negotiated this bailout with the New York Fed, which was run by Timothy Geithner, who's currently the Treasury secretary. But Geithner says he didn't know about the latest round of bonuses until a week or so ago, and then he only told the president. So, you know, for the average person taking a look at this, you got to figure that these people - either somebody is being less than truthful, or the whole lot of them, particularly in the context of the Treasury, is being incompetent.

COX: Well, here's the other part of that, Sherrilyn. Even if we do find out who the person was who put that clause in there and whether or not Geithner knew, whether or not Obama knew, whether or not Chris Dodd knew, what can they really do about it? They are now trying to come up with ways to recoup this money. But I don't know - and I want you to respond because you're a lawyer - if they have a legal leg to stand on.

Prof. IFILL: Well, certainly, they've got contracts in place that they would have to deal with. And that's been the argument, that, you know, that we've got these kind of rock-solid contracts with these employees that would require them to pay the bailout, the bonus money, and that if they try and break those contracts, they're going to have to pay out legal fees and, of course, we'll be paying those legal fees as the government tries to sue the employees. But the government has so much power. They're in the driver's seat in this. The reality is that all of those employees who were in the financial products division of AIG ought to be very concerned about the possibility that the government can decide that they want to launch a federal investigation into the particular actions of each and every one of the employees in that division, to determine whether or not some laws were broken in the management of those financial products for AIG. That's the kind of context in which many people would decide not to take the bonus...

(Soundbite of laughter)

Prof. IFILL: Would decide to renegotiate the contract. The federal government has a lot of power. The question I really think, Tony, is whether they want to exercise it. Because I've got another theory that goes along with Robert's, which is that we're talking about a culture shift. The reason that nobody noticed it in the fall is because Geithner and Paulson, they're all part of the same culture in which this was the norm, that these kinds of bonuses would be paid out. And so, I don't think that they affirmatively put it in there. They didn't take it out because it didn't occur to them that this was something beyond the pale. I do think we can begin to try and follow the trail that Senator Ron Wyden has suggested we should follow. He and his main colleague, Olympia Snowe, had put a provision in the bill that would have capped bonuses at $100,000, and anything above that would have been taxed at 35 percent, and that passed through the Senate. And somehow, when it got into the conference committee in the House, it was removed. So we could find out who's responsible for removing that, a provision that was put in - was an amendment put in by two senators that would have, you know, gotten us away from this problem because we would have capped the bonuses at $100,000.

COX: Well, you...

Ms. IFILL: So if we really want to know who, we could start there.

COX: You know, you mentioned something that the president said just as he was on the White House lawn, preparing to leave Washington to come out here to California, in fact, talking about the change in culture. And he did say that whether he knew or didn't know was really - didn't matter because he is, as the president of the United States, responsible in the end, that the buck stops for him. A side note to this, though, Robert, is this: whether or not he's going to take a hit because of this. A Pew poll is showing a dip in President Obama's approval rating to just under 60 percent. Now, that's still good, not as good as it had been. Over the last month, disapproval of his job performance has increased among Republicans and independents substantially, Democrats remaining pretty positive. But you know, you can't have too many more of these kinds of things occur, can you?

Mr. GEORGE: Well, absolutely. And I think one of the things that he has to take a serious look at is his Treasury secretary because Mr. Geithner has been on rocky footing, literally, before he was approved because of his failure to pay taxes. And then, he rolled out this whole - you know, this whole TARP assessment package, which seemed to be completely and totally incomprehensible. And now, on top of that, you've got the AIG situation. The president's press secretary, Mr. Gibbs, said that the president has complete confidence in Geithner. I think at this point, he's the only one that does. So, I would suggest that if those numbers continue to trail and they don't get a handle on this financial mess, Geithner is going to be the one walking the plank.

COX: Let's talk about another angle in terms of how the president is doing. The former vice president, Dick Cheney, gave a television interview in which he discussed many things, including the new president's performance. One might expect what he would probably say about the new president's job so far, but here's what he actually said in an interview with John King.

(Soundbite of interview)

Mr. JOHN KING (Journalist): Do you believe the president of the United States has made Americans less safe?

Former Vice President DICK CHENEY: I do. I think those programs were absolutely essential to the success we enjoyed of being able to collect the intelligence that let us defeat all further attempts to launch attacks against the United States since 9/11.

COX: So Sherrilyn, as we bring our conversation to a close, the president is battling on one front, the economic front, to try to shore things up. And now, slings and arrows are being directed at him from the previous administration with regard to his foreign policy.

Ms. IFILL: I actually think that the former vice president's comments are irrelevant, and I think actually, he's an irrelevant figure right now. I don't think anybody is hanging on the vice president's assessment of whether or not we're safe. Particularly, this was an ironic interview in the same week that the New York Review of Books issued its review of the report of the International Committee of the Red Cross, which demonstrates in no uncertain terms that United States was engaged in torture, and that it was sanctioned at the highest levels. And I think most people would assume that the vice president was involved in the loop. This would be a time in which I think the vice president would want to be, as we say, on the low. And so it was quite surprising for him to come out and make those comments. Even the former President Bush has said that the new president deserves his silence. I think more than anyone, we deserve the silence from Vice President Cheney.

(Soundbite of laughter)

COX: Just reading.

Mr. GEORGE: And I also actually think that the old - the former president also wouldn't mind Dick Cheney's silence on this as well, given that he's still criticizing former President Bush for not pardoning Scooter Libby. So I think Vice President Cheney has some issues that have to be resolved on a number of levels.

COX: Talking about silence, I've only got about 30 seconds for this, but the president coming out here to California to appear, of all places, on "The Jay Leno Show." First time a sitting president has ever done that, Sherrilyn.

Ms. IFILL: Yes. It'll be interesting to see how it goes. I can't imagine that it could hurt him, but it's been a tough week and, you know, I think he's enormously appealing when he appears. And so I expect his numbers will climb back up a little bit in the next few days.

Mr. GEORGE: I think it's somewhat ill-advised. I think he should be waiting until maybe, you know, when the official hundred - the first hundred days are over because when all this other chaos is going on, I think it looks a little bit too rock star-ish to be going on "The Jay Leno Show" at this point.

COX: Well, it'll be interesting to see what happens. Let me thank both of you for coming on, and for coming as many times as you have, as part of our political roundtable on Wednesdays. As you know, this is the last one that we are doing. We appreciate it, and we know the audience does as well.

Mr. GEORGE: And Tony, it's been a real pleasure working with you and Farai and everyone, and we'll definitely miss being here.

COX: Thank you very much, Sherrilyn Ifill.

Ms. IFILL: Wish the show could continue.

COX: OK. A civil rights lawyer and law professor at the University of Maryland Law School. Robert George, associate editorial page editor for the New York Post, joining us from the studios of NPR in New York.

Mr. KEVIN MERIDA (Journalist): I'm Kevin Merida, assistant managing editor for national news at the Washington Post. In this world that gets increasingly more complex, you need - just something to cut through the fog. And News & Notes provides that.

COX: This is NPR News.

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