by Todd Beeton, Mon Mar 16, 2009 at 03:37:57 PM EDT
Yesterday on This Week, Robert Kuttner of The American Prospect balked at the administration's excuse for why it was powerless to stop AIG's bailout payments, i.e. a contract is a contract:
"Well, but they do have a little bit of leverage here. They're giving this company $185 billion and counting and it could say to the company, if you want to come back for more help, which the company will do, you might want to ask these executives to voluntarily forego these bonuses or you might want to fire these executives. [...]
When you put up $185 billion in installments, you can certainly say to these guys, if you want another penny...you really think AIG is going to say, ok we'll fall on our sword, we'll go bankrupt?"
Monday afternoon, a White House official said the Treasury Department will use a planned $30 billion infusion into AIG to compel the company to repay the bonuses to employees of its financial-products group, which is responsible for selling the exotic financial instruments that brought the company to near-collapse.
The infusion, announced March 2, won't be finalized until the company and the Treasury work up repayment options, the official said. The bonuses to the financial-products division were "found to be completely unacceptable given that AIG is already surviving on taxpayer funds," the official said.
Update [2009-3-16 21:24:46 by Todd Beeton]:Barney Frank on Rachel Maddow:
We own the company. We are the majority owners. I think the federal government should now step in as the owner and say to these employees, our employees, bonus my foot! you messed up this company and whatever your contract said, it can't be interpreted to mean that we're going to reward you for losing money.
White House officials said the Treasury would recapture the bonus money by writing new requirements into a $30 billion installment of government aid scheduled to go soon to the ailing insurance conglomerate. The government has already provided $170 billion in taxpayer assistance to keep A.I.G from failing and now owns nearly 80 percent of the company.
But administration officials conceded that almost all of the most recent round of bonuses, totaling $165 million, had been paid last Friday, one day before the Treasury publicly acknowledged that it had reluctantly approved the payouts. The officials said that people who received the bonuses would probably be able to keep them.
By seeking to link repayment of the bonus money to the coming $30 billion in assistance, the administration seemed to leave open the possibility that the company would effectively be repaying taxpayers with taxpayer money. A Treasury official disputed that taxpayers would be repaying themselves, but could not specify how else the company would give back the money.