Why Obama Didn't Know About AIG's Bonuses

[eppur_se_muova]

Source: WaPo

(Washingtonpost.com) This story was written by Washington Post Staff Writers David Cho and Michael D. Shear.
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Federal Reserve officials knew for months about bonuses at American International Group but failed to tell the Obama administration, according to government and company officials, exposing problems in a relationship that is vital to addressing the financial crisis.

As pressure mounted on AIG employees to return the bonuses, new details emerged yesterday about what the Fed, the Treasury Department and the White House knew regarding the payments and when. AIG executives said the Fed was informed three months ago by the company that it would pay $165 million by March 15 to employees working at its most troubled division. The Treasury and White House said they learned of the payments from Fed officials only days before they were due.

Close coordination between the Fed and the administration is now more important than ever as they near the launch of two signature programs to rescue the financial system, which together could reach $2 trillion and are aimed at reviving consumer lending and purchasing soured assets and loans from ailing banks.

Treasury Secretary Timothy F. Geithner, a central figure in the decision to bail out AIG last fall as president of the Federal Reserve Bank of New York, said in an interview yesterday that he had not been aware of the size of the bonuses and the timing of the payments.


Read more: http://www.cbsnews.com/stories/2009/03/19/politics/washingtonpost/main4875683.shtml

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I heard about this on CBS a couple of days ago (hence the link through cbsnews.com). Apparently Bu**sh** approved the bonuses back in APRIL and left them as a POISON PILL for Obama. This is already being played as "the first genuine full-blown crisis of the Obama administration" and pundits are calling for Obama's picks -- particularly Geithner -- to be fired. This stinks of a manufactured crisis, one designed specifically to force Obama to start over and make even more concessions in back-room negotiations involving much "bipartisanship".

"AIG Flap Derails Obama Message" is the title of another WaPo story. Bad luck? Hardly.

[indepat]

1. Seems a strange way for Bernake to campaign for a re-nomination as Fed Chair

:shrug:

[Blue State Bandit]

2. Keep Geithner, arrest Bernanke!

We all knew that there was something in the wind; some kind of trip wire left behind by the "evil geniuses" of the Bush administration. More and more, it seems that this is one of those traps left behind. And Bernanke was left in place to see that the trap was sprung.

All of these calls for Geithner to resign is a smoke screen. Brenanke is the culprit here. He's the one in the position to keep this trap obscured from the White House, he's the one that helped to put it in place.

I'm willing to bet that this is why Bush was so "helpful" in the transition. This is why he refused to criticize Obama this week. He knew that the trap was about to spring, and he didn't want to spoil the surprise.

Fucking treasonous bastards!

Don't let them torpedo our country just to save their own party. It's time we stood up to these fake patriots.

Until someone proves that Geithner knew this was going to happen, I got his back.

[Pastiche423]

4. Why keep geithner?

He is part of the reason we're in this fucked up financial crisis!

[Norrin Radd]

3. Doesn't matter that they are trying to pin it on him.

He diffused that by stating < he is the President, so he takes responsibility >.

[stubtoe]

5. Poison pill indeed. Will the MSM continue to pound away about the Outrage now?

This tracks right back to Junior's administration. Que surprise.

[biopowertoday]

6. Axelrod knew Feb 15 and............

These are Axelrod's words and he says Obama was outraged feb 15.

and Think progress also has a piece about this issue from Feb 15:

http://thinkprogress.org/2009/02/15/exec-pay-debate/


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http://www.huffingtonpost.com/2009/02/15/white-house-concerned-abo_n_167041.html

February 15, 2009 10:21 AM

The Obama administration acknowledged on Sunday that its top economic officials had expressed concerns to Congress that the sharp restrictions on executive compensation included in the stimulus package could be counterproductive. Moreover, they did not rule out the possibility that the president could loosen the restrictions.

In an appearance on Fox News Sunday, chief strategist Axelrod said that the President and Congress shared the same "outrage" over the "spectacle of gaudy bonuses for executives at firms that are getting extraordinary assistance from American taxpayers." But he also acknowledged "concerns" that the restrictions in the stimulus went too far. Critics of restrictions believe they will encourage top-officials to leave their companies or persuade banks to not participate in the TARP program.

"Well, obviously, Secretary Geithner and Mr. Summers had concerns about that," said Axelrod. "And they expressed those concerns. But the concerns are at the margins and the goal is one we share."

The president has said he favors capping compensation. But in the final version $787 billion package, Congress also put restrictions on the size of bonuses that bank executives could receive, and expanded the pool of impacted companies beyond what President Obama and Treasury Secretary Geithner announced in early February.

Here is the transcript:

CHRIS WALLACE: It now turns out that buried in the economic stimulus plan that was passed this week by Congress is a measure that would sharply restrict bonuses for top earners on Wall Street. The White House is reportedly worried that this could result in a brain drain from the firms. That some firms may pay the money back more quickly than they responsibly should so they don't have those restrictions. Is the white house going to try to soften that set of restrictions on pay?


AXELROD: Let me say the President's been very clear that he shares the outrage that most Americans feel about the spectacle of gaudy bonuses for executives at firms that are getting extraordinary assistance from American taxpayers. It's not right. It shouldn't move forward. He's announced his own guidelines for how we should restrict that. In some ways they're tougher than the ones that the Senate passed. They have a hard cap, for example, on compensation. And in other ways they differ. So we're going to work with them... with Senate and the House -- to come up with an appropriate approach to this........