CNN's Whitfield advanced false GOP claim that recovery bill created right for AIG to pay bonuses

During the March 21 edition of CNN Newsroom, anchor Fredricka Whitfield advanced the false Republican accusation that Democrats created the right for AIG to pay bonuses by passing the American Recovery and Reinvestment Act. Whitfield asserted that Sen. Chris Dodd (D-CT) was "widely criticized for allowing the bonuses in the first place," and then did not challenge guest and criminal defense attorney Richard Herman's claim that "[t]he stimulus package specifically included these bonus payments to be made. ... Then, pursuant to the congressional action approving the stimulus and the contracts existing at AIG, the bonuses were paid. Well, all of a sudden, Congress says, 'How could you pay those?' Congress authorized it." In fact, as Media Matters for America has repeatedly documented, the recovery bill did not create the right for AIG -- or any company -- to pay bonuses. Rather, AIG reportedly disclosed that it had entered into agreements to pay these bonuses more than a year ago, and the Bush Treasury department approved of the AIG bailout with this agreement in place. Furthermore, the relevant provision in the recovery act, which was based on an amendment by Dodd, actually restricted the ability of companies receiving money from the Troubled Asset Relief Program (TARP) to award bonuses in the future.

As Media Matters noted, CNN senior congressional correspondent Dana Bash also recently misrepresented the economic recovery bill's provision concerning executive compensation. CNN is slated to air a special report on AIG on March 21 and 22.

From the noon ET hour of CNN Newsroom on March 21:

WHITFIELD: As if there wasn't enough outrage already, we have new developments in the AIG bonus fiasco. Twenty states -- the ones you see in blue right here -- have announced official investigations into the payouts. Connecticut's attorney general has issued subpoenas for AIG's CEO, Edward Liddy, and 11 other company executives. The state's senior senator, Chris Dodd, widely criticized for allowing the bonuses in the first place, claims that he was misled by Treasury officials.

Tonight, Ali Velshi and the CNN Money team search for truth inside the AIG scandal. See what they found in AIG: Facts & Fury, a CNN special report, tonight at 8 o'clock Eastern.

And because now, this has become a legal case, with the attorney general in Connecticut getting involved, among others, we thought we'd turn to our legal guys. Always great to see you. Avery Friedman, a civil rights attorney and law professor. And Richard Herman, a New York criminal defense attorney and law professor, good to see you as well.

HERMAN: Hi, Fred.

FRIEDMAN: Good to see you.

WHITFIELD: OK, Richard I'm going to begin with you because, you know, you've been away from [unintelligible] for a while, so I'm going to begin with you on the heavy lifting with AIG. Why is this now a case that the attorney general would get involved in -- at least in Connecticut?

HERMAN: It's not, Fred. It's pathetic. It's absolutely pathetic. The 10-Q filings by AIG before they voted on the stimulus reflected these bonuses payments would be made. The stimulus package specifically included these bonus payments to be made. Congress voted on that and approved this package, although the Congress probably never read the proposal that they voted for.

Then, pursuant to the congressional action approving the stimulus and the contracts existing at AIG, the bonuses were paid. Well, all of a sudden, Congress says, "How could you pay those?" Congress authorized it. That was a fiasco the other day. It was disgusting.

WHITFIELD: So this is not a legal case. You say this doesn't belong in court?

HERMAN: There is no legal case for these bonuses.

FRIEDMAN: Right, right.

HERMAN: They were entitled to be paid.