WaPo: AIG bonuses known for months before outrage

posted at 10:02 am on May 13, 2009 by Ed Morrissey

Actually, the outrage here may be that the Washington Post considers this a journalistic scoop — and that they’re probably right.  David Cho and Brady Dennis dutifully report that the New York Fed knew about the AIG bonuses in the fall of 2008, but sat on the information for months.  They informed the Obama administration in late February, though, well before they and Congress feigned shock, shock over contractually-obligated retention bonuses:

Documents show that senior officials at the Federal Reserve Bank of New York received details about the bonuses more than five months before the firestorm erupted and were deeply engaged with AIG as well as outside lawyers, auditors and public relations firms about the potential controversy. But the New York Fed did not raise the alarm with the Obama administration until the end of February.

Timothy F. Geithner, who became Treasury secretary early this year, was the head of the New York Fed when it became aware of the bonus details. But his name is not among those of senior New York Fed officials mentioned in the summaries of phone calls, correspondence and other documents obtained by The Washington Post.

Those documents also illuminate who in the government, beyond the New York Fed, knew what about the bonuses at AIG’s most troubled unit, and when.

Key members of Congress began investigating the payments as long ago as October and, beginning in January, repeatedly warned the Treasury about the matter.

In early February, Fed officials in New York sent details about the bonus program to their counterparts at the Federal Reserve in Washington, to prepare Chairman Ben S. Bernanke in case he was asked about the payments at a congressional hearing.

By the time the Obama administration was fully engaged in early March, the New York Fed had determined that AIG was legally bound to pay the bonuses to its Financial Products division, the documents show. Top New York Fed officials also huddled with AIG about developing a strategy to mollify angry lawmakers — but that did little to quell the firestorm that ensued.

Cho and Dennis do some fine reporting here, quite in-depth and detailed, and the article deserves a thorough reading.  However, only the details of this are new, as many of us in the blogosphere have already established through public records that Congress and the administration knew about these bonuses long before they made a pretense of outrage over AIG meeting its contractual obligations.

Take one example.  The Post notes that Congress had knowledge of the compensation plans as early as last October.  That shouldn’t exactly be news; AIG published its compensation plans in November, in its annual report, accessible here, as they do every year.  If the administration and Congress had done even the most rudimentary due diligence on AIG before throwing $150 billion at them in bailout cash, they would have known about it from the beginning — and apparently everyone did.

In fact, the Post notes that Rep. Jerry Crowley took a special interest in the bonuses last fall, and pressed for answers on whether they could be stopped.  Treasury looked long and hard at the issue and concluded early this year that AIG was bound by its contracts to pay them.  That didn’t stop Crowley from grilling Treasury Secretary Tim Geithner in a House committee hearing nine days before the Obama administration feigned shock and outrage over bonuses they themselves had reluctantly blessed:

Thank you, Mr. Chairman. Welcome to the committee, Mr. Geithner, and thank you for your responses so far. It never ceases to amaze me the level of apparent amnesia some of my colleagues on the other side of the aisle have had about how we got to this problem in the first place, and I thank you for answering Mr. Heller’s question in particular. By the line of questioning, you’re almost led to believe that because of a last month and a few days of a presidency we had the problem we have today, and thank you for setting the record straight. This didn’t happen overnight. This took eight years in the making of stagnant, at best, growth.

But yesterday, Mr. Secretary, the Treasury and the Federal Reserve announced a new fourth plan to rescue troubled financial services giant AIG. I do agree that AIG’s sustainability is the lynchpin for some of our recovery efforts, and it’s important for the federal government to work to keep it afloat. However, I must demand that AIG increase the accountability and transparency, something that was not done during the previous administration.

For example, just last month, AIG paid 343 employees of AIG FP — their Financial Products division that created the financial hole that AIG is in, and in turn a multibillion-dollar bill for American taxpayers — $56 million in bonuses and are slated to pay an additional $162 million in bonuses to 393 participants in the coming weeks. And there’s more. Further bonus payments totaling approximately 230 million (dollars) are due to 407 participants at AIG’s Financial Products division in March 2010. This makes no sense to my constituency.

All of this has been known for the past two months.  The Post’s article gives some solid background, but really doesn’t break the news that the Obama administration, Treasury, and Congress all lied in order to demagogue on a populist platform and enrage “pitchfork America”.  However, few news media outlets have been willing to report that — and for that, the Post should be congratulated for getting the scoop on most of its colleagues.


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Congratulations WashPo, for breaking this story about a month after the general public stopped paying attention.

myrenovations on May 13, 2009 at 10:04 AM

Too bad the media usually turns a blind eye to anything Obama. Maybe the press has decided to actually start doing its job.

bopbottle on May 13, 2009 at 10:05 AM

What’s the expression?

“when the tide goes out – we can all see who was skinny dipping”

jake-the-goose on May 13, 2009 at 10:05 AM

NOOOOO

Months? I’m impressed team O… you surprised me. I thought only weeks…

Upstater85 on May 13, 2009 at 10:05 AM

Can you impeach a sitting Treasury Secretary?

Dr.Cwac.Cwac on May 13, 2009 at 10:06 AM

Nothing surprises me anything. They all lie.

deidre on May 13, 2009 at 10:07 AM

All of this has been known for the past two months. The Post’s article gives some solid background, but really doesn’t break the news that the Obama administration, Treasury, and Congress all lied in order to demagogue on a populist platform and enrage “pitchfork America”.

ACORN to hire protesters for Treasury and the White House in 5…4…3…2….1….Never

Dr.Cwac.Cwac on May 13, 2009 at 10:07 AM

Can you impeach a sitting Treasury Secretary?

Dr.Cwac.Cwac on May 13, 2009 at 10:06 AM

For what? Does lose perspective – AIG needed the people who were paid these bonuses.

You can’t save a sinking ship if all hands jump.

Assuming the ship is worth saving that is?

jake-the-goose on May 13, 2009 at 10:08 AM

Timmy TurboTax knowingly allowed his boss to play populist fury like a Banjo strumming hypocrit????

who knew?

sven10077 on May 13, 2009 at 10:09 AM

myrenovations on May 13, 2009 at 10:04 AM

hahahahah. But if every day one of our major newspapers would point out just how much Congress and the Administration lie to the citizens of this country, I say job well done even if it does take a couple months to expose them for what they are. Thanks WAPO! And the more they expose the truth the more they may increase their readership and thus avoid bankruptcy! It’s a win win, the truth is.

scalleywag on May 13, 2009 at 10:10 AM

Timmy TurboTax knowingly allowed his boss to play populist fury like a Banjo strumming hypocrit????

who knew?

sven10077 on May 13, 2009 at 10:09 AM

RACIST -somehow!

Upstater85 on May 13, 2009 at 10:11 AM

My momma always told me lying never pays. My church told me it was a sin. Guess our leaders never learned such things…the do it so frequently it’s like brushing their teeth.

scalleywag on May 13, 2009 at 10:12 AM

Some piece of work. Yes the whiners appear to be unable and unwilling to read annual reports.

seven on May 13, 2009 at 10:12 AM

My momma always told me lying never pays. My church told me it was a sin. Guess our leaders never learned such things…the do it so frequently it’s like brushing their teeth.

scalleywag on May 13, 2009 at 10:12 AM

Guess you didn’t go to Rev. Wright’s truech.

Upstater85 on May 13, 2009 at 10:13 AM

And now, accoding to CNN, Obama and Geitner et al are looking at limiting bonuses of ALL wall street executives and bonuses to any one working on the street. Regardless of TARP participation.

Reap what you sow.

todler on May 13, 2009 at 10:14 AM

Investigative Journalism.

/sarc

bluelightbrigade on May 13, 2009 at 10:14 AM

And now, accoding to CNN, Obama and Geitner et al are looking at limiting bonuses of ALL wall street executives and bonuses to any one working on the street. Regardless of TARP participation.

Reap what you sow.

todler on May 13, 2009 at 10:14 AM

they wanted the unicorn, they forgot it had a horn.

sven10077 on May 13, 2009 at 10:15 AM

The “outrage” over the AIG bonuses was a dog and pony show from the beginning.

Paul-Cincy on May 13, 2009 at 10:16 AM

For what? Does lose perspective – AIG needed the people who were paid these bonuses.

jake-the-goose on May 13, 2009 at 10:08 AM

Gross incompetence
Negligence
Perjury

Dr.Cwac.Cwac on May 13, 2009 at 10:16 AM

I will blame the Ivy league graduates and their schools that excel at producing elitiest thinking, willful ignorance, and righteous indignation.

WashJeff on May 13, 2009 at 10:20 AM

I’m shocked it’s even being reported…even it’s 2 months late!

SouthernGent on May 13, 2009 at 10:21 AM

Well the whole faux-rage was really just a dress rehearsal, to see how the administration could gin up outrage and get “volunteers” to mobilize and intimidate productive Americans. Well, it would have been a dress rehearsal if the brown shirts had come in time.

rbj on May 13, 2009 at 10:28 AM

Well the whole faux-rage was really just a dress rehearsal, to see how the administration could gin up outrage and get “volunteers” to mobilize and intimidate productive Americans. Well, it would have been a dress rehearsal if the brown shirts had come in time.

rbj on May 13, 2009 at 10:28 AM

It’s called ACORN and the census.

Dr.Cwac.Cwac on May 13, 2009 at 10:29 AM

Nothing new here. CBS first reported on the AIG bonuses in 2008, when the first part of the bonuses were paid out. Of course, they forgot that once Obama was inaugurated.

hawksruleva on May 13, 2009 at 10:29 AM

Actually, the outrage here may be that the Washington Post considers this a journalistic scoop — and that they’re probably right.

Welcome to the show Wapo.
Thanks for confirming what people who were paying attention knew months ago.

Could not report it then,would have gotten in the way of Obama’s faux outrage.

and in another scoop,the post plans to reveal tomorrow that
(D) John Edwards had an affair on his wife while she is fighting for her life against cancer.

Crack staff there.
No wonder they need to be bailed out along with the other institutions of liberal activism that call themselves “Newspapers”.

Baxter Greene on May 13, 2009 at 10:32 AM

Anyone catch the story on Chrysler execs avoiding the bonus cap? First off, the bonus cap is ridiculous, anyway, a sure way to drive talent to other companies.

But Chrysler is getting around the cap by making some execs FIAT employees.

The moral of this story: rules only apply to Obama’s enemies. Of course, as California has learned, you may become an enemy for any reason, at any time.

hawksruleva on May 13, 2009 at 10:33 AM

The lies and deption by Barry’s Gang just keeps on keeping on. When the truth becomes totally irrelevant to the democrats, then the hope for our nation diminish to the point of helplessness. The basic decency of leadership is eroding so fast that the leaders have become the enemy.

volsense on May 13, 2009 at 10:35 AM

So why do you think WaPo “broke” the story now? Why even bother? What is their motive? Is it so they can point to being “honest” and “neutral” for historical sake? Nevermind that they were not timely!

PrincipledPilgrim on May 13, 2009 at 10:37 AM

It might deserve reading, but no thanks. Anyone who has been in business knew that the administration was lying through its teeth.

What we DID learn about Obama wasn’t very pretty, either. He’s not only willing to boldly lie, but then, he will scapegoat the business shamelessly for his own popularity ratings.

He’s now set off a witchhunt of unprecedented proportion in our country.

AnninCA on May 13, 2009 at 10:42 AM

It’s all Kabuki Theatre with the Obama cabal.

The better question to ask is who pulls the strings. Certainly not the clown with the talking box.

notagool on May 13, 2009 at 10:45 AM

Is it treason to speak against treason?

whiskeytango on May 13, 2009 at 10:49 AM

That didn’t stop Crowley from grilling Treasury Secretary Tim Geithner in a House committee hearing nine days before the Obama administration feigned shock and outrage over bonuses they themselves had reluctantly blessed:

Where’s the shock and outrage at the Fannie and Freddy bonuses??? And how can government funded institutions like F&F be allowed to make ANY CAMPAIGN CONTRIBUTIONS????

Rovin on May 13, 2009 at 10:51 AM

So why do you think WaPo “broke” the story now? Why even bother? What is their motive? Is it so they can point to being “honest” and “neutral” for historical sake? Nevermind that they were not timely!

PrincipledPilgrim on May 13, 2009 at 10:37 AM

One word—-bailout

Rovin on May 13, 2009 at 10:53 AM

Postage goes up and we find the director approaching a million bucks. Oh and the MSM. they are loaded with millionaires. Some one needs to get outraged.

seven on May 13, 2009 at 10:55 AM

Next thing you know, Pelosi will be on the front page of WAPO with a headline: CONFIRMED…HOUSE SPEAKER LIED ABOUT KNOWLEDGE OF WATERBOARDING.

scalleywag on May 13, 2009 at 10:55 AM

Is it treason to speak against treason?

whiskeytango on May 13, 2009 at 10:49 AM

.
No. But the traitors will call it that.

darktood on May 13, 2009 at 10:56 AM

“I ike to know what I’m talking about”
–Obama to Ed Henry, in what the left celebrated as Obama b*tchslapping Henry.

MayBee on May 13, 2009 at 11:05 AM

Better late than never, WAPO.
Unfortunately, it does nothing for the National Enquirer, People magazine etc.. crowd.
Thanks to the news becoming nothing but one giant sound byte, the attention spans of generations cannot handle the truth without it being presented as a sound byte anymore.
This crap needs to be brought up CONSTANTLY & hammered into the heads of the public.
It is how teenagers learn-CONSTANT reinforcement.
Reputable news outlets need to do this.

Badger40 on May 13, 2009 at 11:10 AM

Liars. How many lies can they tell before their willing media and lemming followers ask WTF?

kirkill on May 13, 2009 at 11:14 AM

Why report it now?

This didn’t fit into the President’s narrative, so it wasn’t news until the story fades in peoples’ minds. Then it can be reported and it will blend into the narrative.

Obama’s reputation remains intact, WaPo get credit for reporting it. Win-Win.

rockhead on May 13, 2009 at 11:23 AM

Turbo-Tax Tim totally trashes truth!

jgapinoy on May 13, 2009 at 11:24 AM

Turbo-Tax Tim totally trashes truth!

jgapinoy on May 13, 2009 at 11:24 AM

Tim Lies

Capitalism Dies.

Upstater85 on May 13, 2009 at 11:32 AM

In October the NY Fed was told, that would be Geithner …

tarpon on May 13, 2009 at 11:53 AM

I do agree with the poster who said, “Why bother breaking the story now?”

I’m a bit toast on traditional journalism relying on “in-depth” journalism stories that couldn’t possibly undo the story after it’s out on a tabloid style.

That’s phony.

AnninCA on May 13, 2009 at 12:25 PM

Upstater, this isn’t Tim. This was Obama.

Tim is just doing exactly what he should be doing, in my opinion, which is to stablilize the financial markets. Like it or not, he’s doing that.

The “heads on a stick” schtick……..That’s not Geithner. That’s admin’s PR.

AnninCA on May 13, 2009 at 12:26 PM

The sad–and scary–thing is that if you read the comments following the WaPo article, the Obots are blaming everything on “unfettered capitalism.” Capitalism has run its course. It has failed. Bring on the socialist utopia.

Barry is a lying, manipulative, ignorant thug, but his genius supporters are ready to follow him to the gates of hell. The Founding Fathers’ great experiment is living on borrowed time.

Meredith on May 13, 2009 at 1:11 PM

Treasury looked long and hard at the issue and concluded early this year that AIG was bound by its contracts to pay them.

Since when have contracts stopped the Obama presidency and Treasury from anything?

Bound by contracts, think CONSISTENCY!

maverick muse on May 13, 2009 at 1:56 PM

The Founding Fathers’ great experiment is living on borrowed time.

Obama would have us believe WE are living on borrowed time. No more than he is.

Conservatives have a knack for preserving the best, though all else fail, uphold the Constitution.

If Obama bankrupts the USA and every state in the union, uphold the Constitution.

So long as WE VOTE AGAINST FURTHER DEBT, HIGHER TAXES AND CUT ENTITLEMENTS, so long as we endure with less government, when forced to start our economy anew, as with the world in the same global mess, to hell with certain debt. Let our debtors forgive our debt, tit for tat. So we won’t be able to borrow. GOOD! We’ll have to make do with what we actually have, and our politicians can’t borrow to stay in office looking pretty. As if going further down the bottomless pit is better.

maverick muse on May 13, 2009 at 2:05 PM

“Unfettered Socialism”–Stick it in their fascist faces.

Never answer a stupid question; rather, make your own pertinent point. There is no Marxist regime that did so well for its people as our free enterprise system has done for America and the world, and continues to bless with bounty for all participants whenever permitted.

Aside from all of the benefits American has given to them since Nixon, the only reason China is progressing is because they are converting into Fascism, as is Russia, and building their economy with their own version of capitalism, as communism is suicidal.

But politically, their people have no liberty to show for all of their hard work, no voice in how they are governed, and their complaints are met with a deaf ear, prison or execution. Any damned Democrat, Socialist or Progressive who denies that is a bold faced liar, saboteur, assassin and thug.

maverick muse on May 13, 2009 at 2:17 PM

And now, accoding to CNN, Obama and Geitner et al are looking at limiting bonuses of ALL wall street executives and bonuses to any one working on the street. Regardless of TARP participation.

Reap what you sow.

todler on May 13, 2009 at 10:14 AM

Of course, for their FRIENDS, those limits will magically disappear, just as they’re doing for Obama-Chyrsler-Fiat.

Timmy G’s initial reluctance to break contracts has since been corrected. Contract? We don’t abide by no stinking contracts! We’re the United States! The most powerful nation on earth! You must OBEY!

Unless you hate/kill Americans, in which case, we apologize for our arrogance. Here, have some cash.

hawksruleva on May 13, 2009 at 3:15 PM

Geitner is a Democrat;and your point is?

DDT on May 14, 2009 at 2:38 AM