USA Today, LA Times continue to omit Bush Treasury's role in AIG bonus controversy

››› ››› ANDREW WALZER

USA Today and the Los Angeles Times reported Republican criticism of the Obama administration over AIG's employee bonus packages but did not point out that it was the Bush Treasury Department that worked with the Federal Reserve in carrying out last year's bailouts and bought AIG stock notwithstanding the existence of these bonus contracts.

In March 18 articles, USA Today and the Los Angeles Times reported Republican criticism of the Obama administration over American International Group's (AIG) employee bonus packages but did not point out that it was the Bush Treasury Department that worked with the Federal Reserve in carrying out last year's bailouts and bought AIG stock notwithstanding the existence of these bonus contracts. On March 17, USA Today and the Times similarly ignored the Bush administration's involvement in the AIG controversy, as Media Matters for America documented.

USA Today reporters John Fritze, Mimi Hall, and Adam Shell reported on March 18, "Treasury Secretary Timothy Geithner -- who had come under criticism for his handling of the issue by Republican lawmakers, including Sen. Richard Shelby, R-Ala. -- promised in a letter Tuesday night to House Speaker Nancy Pelosi that Treasury will recover all the money." They further reported:

Republican lawmakers including Shelby questioned why President Obama and Geithner did not take action to stop the bonuses earlier. Shelby told CBS' Early Show it was another example of Geithner being "out of the loop." Shelby asked, "Where was Treasury before this money was paid out?"

At no point did USA Today mention that the Bush Treasury Department also "did not take action to stop the bonuses" when it approved the bailouts.

Similarly, Los Angeles Times reporters Jim Puzzanghera and Janet Hook reported on March 18, "[Sen. Charles] Grassley [IA], the senior Republican on the Senate Finance Committee, asked Treasury Inspector General Eric Thorson to open an inquiry into the AIG bonus payments and determine whether top Treasury officials had some role in approving the payments, according to Grassley's office." Puzzanghera and Hook further wrote:

The inquiry could turn the heat back on the Obama administration, which has expressed outrage over the payments and wants to challenge them.

In a letter to Thorson obtained by The Times, Grassley asked whether Treasury officials made any previous efforts to block the bonus payments or demanded that the payments be waived before releasing taxpayer bailout funds to the company. Thorson also would examine whether there are contracts that compel the payments and, if so, when those legal obligations were created.

[...]

Democrats tended to blame corporate greed. Republicans harshly criticized Geithner, though they stopped short of calling for his resignation.

Geithner approved the bonuses last weekend after determining that they were contractual obligations by AIG that could prompt lawsuits if not paid. His decision came less than two weeks after federal officials agreed to extend AIG an additional $30-billion line of credit on top of the $150 billion in bailout funds the government had already sunk into the company.

"What I'd like a full explanation of is how the Department of the Treasury handed over $30 billion a mere two weeks ago and didn't have any idea that this outrage was going to occur," Senate Minority Leader Mitch McConnell (R-Ky.) said.

The Times did not mention, however, that the Bush Treasury Department "handed over" a greater sum to AIG without addressing the company's bonus contracts.

By contrast, in a March 17 Politico article, executive editor Jim VandeHei wrote that "[t]he bonuses were essentially a nonissue when AIG got its initial bailout money, almost $150 billion under President Bush in the two months surrounding the presidential election." As Media Matters noted, The Washington Post reported on March 17 that "AIG disclosed its retention-payment program more than a year ago, and the amount of the bonuses -- more than $400 million for Financial Products alone -- had been widely reported."

In a September 16, 2008, article about the initial bailout of AIG, The New York Times reported: "Fearing a financial crisis worldwide, the Federal Reserve reversed course on Tuesday and agreed to an $85 billion bailout that would give the government control of the troubled insurance giant American International Group." In a November 10, 2008, article, the Times reported that the Bush Treasury Department and Federal Reserve announced a "revised bailout" of AIG, under which "the Treasury Department will use the Troubled Asset Relief Program [TARP], the $700 billion financial system rescue plan, to buy $40 billion of newly issued A.I.G. preferred shares." Senate Minority Leader Mitch McConnell (R-KY), who was quoted in the Los Angeles Times article criticizing the Obama administration's recent handling of AIG, voted to pass the October 2008 TARP legislation -- a fact the Times article did not note.

From the March 18 USA Today article:

As new details emerged about $165 million in bonuses paid by insurance giant AIG, lawmakers and administration officials sought ways to recoup the money either by imposing stiff new taxes on the extra pay or requiring the company to return it in exchange for future taxpayer aid.

[...]

Treasury Secretary Timothy Geithner -- who had come under criticism for his handling of the issue by Republican lawmakers, including Sen. Richard Shelby, R-Ala. -- promised in a letter Tuesday night to House Speaker Nancy Pelosi that Treasury will recover all the money.

[...]

Republican lawmakers including Shelby questioned why President Obama and Geithner did not take action to stop the bonuses earlier. Shelby told CBS' Early Show it was another example of Geithner being "out of the loop." Shelby asked, "Where was Treasury before this money was paid out?"

White House Press Secretary Robert Gibbs said Obama had "complete confidence" in Geithner.

From the March 18 Los Angeles Times article:

Grassley, the senior Republican on the Senate Finance Committee, asked Treasury Inspector General Eric Thorson to open an inquiry into the AIG bonus payments and determine whether top Treasury officials had some role in approving the payments, according to Grassley's office.

The inquiry could turn the heat back on the Obama administration, which has expressed outrage over the payments and wants to challenge them.

In a letter to Thorson obtained by The Times, Grassley asked whether Treasury officials made any previous efforts to block the bonus payments or demanded that the payments be waived before releasing taxpayer bailout funds to the company. Thorson also would examine whether there are contracts that compel the payments and, if so, when those legal obligations were created.

[...]

Democrats tended to blame corporate greed. Republicans harshly criticized Geithner, though they stopped short of calling for his resignation.

Geithner approved the bonuses last weekend after determining that they were contractual obligations by AIG that could prompt lawsuits if not paid. His decision came less than two weeks after federal officials agreed to extend AIG an additional $30-billion line of credit on top of the $150 billion in bailout funds the government had already sunk into the company.

"What I'd like a full explanation of is how the Department of the Treasury handed over $30 billion a mere two weeks ago and didn't have any idea that this outrage was going to occur," Senate Minority Leader Mitch McConnell (R-Ky.) said.

In a contentious briefing dominated by the AIG issue, White House Press Secretary Robert Gibbs said that President Obama retained confidence in Geithner.

On Monday, Obama had ordered his administration to "pursue every legal avenue" to challenge the bonuses. Legal experts said that would be difficult and could lead to lawsuits.

Some lawmakers said they were concerned about the legality of a tax that would wipe out the bonuses in their entirety, but one tax-law expert saw no impediment to doing so.

Posted In
Economy
Network/Outlet
USA Today, Los Angeles Times
Stories/Interests
Propaganda/Noise Machine
We've changed our commenting system to Disqus.
Instructions for signing up and claiming your comment history are located here.
Updated rules for commenting are here.