Wash. Post still reporting GOP attacks over bonuses while ignoring IG testimony implicating Bush administration
SUMMARY: A Washington Post article reported that "Republicans have seized on the AIG issue in the belief that it has the potential to link Obama more closely to the widely unpopular $700 billion bailout legislation for the financial sector -- legislation that was crafted in the Bush administration." But the article did not note that a Bush-appointed special inspector general for TARP stated in congressional testimony that the Bush administration Treasury Department knew about the AIG bonus contracts and did not insist on their abrogation as a condition of AIG's receiving bailout money.
In a March 22 Washington Post article, staff writers Michael D. Shear and Paul Kane wrote that "Republicans have seized on the AIG issue in the belief that it has the potential to link Obama more closely to the widely unpopular $700 billion bailout legislation for the financial sector -- legislation that was crafted in the Bush administration." Shear and Kane went on to report Sen. John Cornyn (R-TX) saying of the Obama administration: "They're in charge. ... This could be a game changer in one sense. It's tapped into the populist outrage." However, Shear and Kane did not note that, as Media Matters for America has documented, Neil Barofsky, a Bush-appointed special inspector general for the Troubled Asset Relief Program (TARP), stated in March 19 congressional testimony that the Bush administration Treasury Department knew about the AIG bonus contracts and did not insist on their abrogation as a condition of AIG's receiving bailout money through a stock purchase agreement signed by AIG and the Bush Treasury Department.
Previously, the Post reported on March 20 that after Congress' move to "levy punitive taxes on bonuses paid by financial firms receiving government aid," the "Republicans voiced strong objections to the tax approach, calling it a smokescreen for the [Obama] administration's faulty oversight of the Troubled Assets Relief Program." The article quoted Sen. Jon Kyl (R-AZ) as saying, "It sounds to me like these guys are trying to cover their tracks," and also reported: "Eager to blame Democrats as not preventing the bonuses, GOP lawmakers pointed to a last-minute tweak last month to the $787 billion stimulus package that allowed for bonuses that were signed in contracts before Feb. 11." However, according to a Media Matters search*, the Post has yet to report on Barofsky's testimony about the negotiations of the stock purchase agreement.
In prepared testimony for a March 19 House Ways and Means Committee hearing, Barofsky stated, "Preliminary information we have seen indicates that the TARP contract between AIG and Treasury that was entered into back in November specifically contemplated the payment of bonuses and retention payments to AIG employees, including AIG's Senior Partners." He also stated that his office "will be reviewing the process at Treasury with respect to Treasury's decision to authorize and approve such payments, both at the time it entered into the contract with AIG and since that time." During an exchange with Rep. Peter Roskam (R-IL) in the hearing, Barofsky explained that in AIG's November 2008 agreement with the Bush Treasury Department, "retention payments were explicitly contemplated." From the testimony (transcript retrieved from the Nexis database):
REP. ROSKAM: You mentioned the online aspect of the disclosure of the TARP agreements. Would those online disclosures, as they're currently exercised by Treasury, would they have revealed the AIG problem?
MR. BAROFSKY: It would have revealed that in the AIG agreement with Treasury, retention payments were explicitly contemplated. It didn't list the contracts; it didn't list the amounts, but in the executive compensation provisions, there's an explicit reference to retention payments in calculating the total amount of payment a senior executive could receive. So that issue was, in fact, in those agreements.
REP. ROSKAM: So is it fair to say that if they had been online, that issue would have been red flagged and certainly drawn attention in advance to the problem?
MR. BAROFSKY: Potentially. I'm not sure of the exact date that the AIG agreement did go up on the Internet. Our recommendation was sort of adopted in waves after it was made in late December and is now being fully complied with. But I'm not sure the exact date the AIG agreement went up.
REP. ROSKAM: I understand.
Thank you. I yield back.
Indeed, the executive compensation section of the Bush Treasury Department's November 2008 TARP agreement with AIG addresses the "annual bonus for 2009" for "Senior Partners," including "all retention payments paid or payable to such Senior Partner under any retention arrangement between the Senior Partner and the Company for any period ending on or prior to March 31, 2010." The section states that such bonuses "shall not exceed 3.5 times the sum of such Senior Partner's base salary and target annual bonus for 2008" and does not mention retention payments for other AIG employees.
A graphic accompanying the March 22 article in the print edition of the Post reported that in "[m]id-October," "Treasury and Fed officials beg[a]n directly dealing with AIG compensation issues" and that on November 11, "AIG reveal[ed] Financial Products bonuses in its third-quarter filings for the first time." But like the article, the graphic did not note Barofsky's testimony or mention the executive compensation provision in the November 2008 TARP agreement between Bush's Treasury Department and AIG.
From the March 22 Post article:
In his weekly radio and Internet address yesterday, Obama made no mention of the AIG bonus scandal, choosing instead to use the forum to urge lawmakers to pass his budget. He plans to do the same at his second prime-time news conference Tuesday night.
His call on Congress to take up "the important work of debating this budget" is unlikely to do much to shift the political conversation away from where it has been for seven days.
Even as the president left Washington mid-week for town hall meetings on the budget and an appearance on "The Tonight Show With Jay Leno," his Treasury secretary became the whipping boy for congressional anger as lawmakers proceeded to draft legislation aimed at punishing AIG executives for the bonuses.
"Quite simply, the Timothy Geithner experience has been a disaster," Rep. Connie Mack (R-Fla.) said Tuesday in calling for the secretary's resignation.
The AIG controversy has prompted Republicans to more directly attack Obama than at any time since he took office. At a Thursday session with reporters, Senate GOP leaders personally mocked him as a dilettante president, busy making lighthearted appearances on television, even talking about college basketball on ABC's "Good Morning America."
"He's even found time to fill out his NCAA bracket," Sen. Lamar Alexander (R-Tenn.) said.
[...]
Republicans have seized on the AIG issue in the belief that it has the potential to link Obama more closely to the widely unpopular $700 billion bailout legislation for the financial sector -- legislation that was crafted in the Bush administration.
"They're in charge," Sen. John Cornyn (Tex.), chairman of the National Republican Senatorial Committee, said of the Obama administration. "This could be a game changer in one sense. It's tapped into the populist outrage."
* Nexis search of Washington Post database was "(Barofsky or inspector general or November) and (AIG or bonus! or retention or (contract or agree!)) and date aft 3/18/2009"
this link is from november 2007, not 2008. it concerns a "patch" on the alternative minimum tax, which was instituted to keep the wealthy from paying no tax because of deductions, but has now started to affect the middle class because of inflation. so it has been addressed with a yearly patch.
as the article shows "not one republican voted for it". "the white house and republicans, protesting tax increases in the bill affecting mainly investment fund managers, maintained it would never become law".
http://www.cnbc.com/id/21710852
Nice to see the republicans once again have our worst interests at heart.
God forbid they should smack the gops with the facts.
You should have heard hannity and Rudy " 9-11 " Giulliani speaking ill of the Obama administration today. I just told myself to stomach thru this love fest and feel the entire comedy act. Didn'r these birds claim at one time to criticise a president , and during a war, is unamerican ?
and as background to this same issue, this link is from august 2007. scroll almost to the bottom, "bush vows fight with democrats on taxes". the republican party is clearly trying to rewrite their history on this issue.
"congressional democrats have been focusing on the issue of tax fairness. at the top of the agenda is a proposal to end what critics see as special tax treatment of hedge funds and private equity managers on their share of profits from successful investments."
http://www.irstaxsupport.com/category/tax-breaks/
I wonder why they attached the AMT to other legislation? It certainly would have passed as a stand alone bill.
Because the few remaining GOP Congresspersons, Senators, and the Bush White House would have voted against the uber-wealthy investment and financial executives having any limits on making themselves wealthier at the public's expense.
After all they voted against it when attached to the AMT -- they would have filibustered it for sure.
Because the GOP is the party of plutocracy.
I see they spent the day predicting a doomsday scenario if Obama's budget plan passes. Guess we don't need a "republicans for dummies" primer this time, they made it clear they intend to fight it again before it ever comes up for debate. If you can't win em, whine em.
They predicted a communist government if Obama won. And Barbie Up North said Obama palled with terrorrists. Are they assuming we don't remember and MMFA doesn't exist ?
the point is that they were looking out for the hedge fund managers. that seems to be the sole issue here since it's the one they complained about. so all their claims that they are the ones in favor of regulation of bonuses and opposed to tax breaks for these managers is simply untrue. it's documented by word and deed.
I agree the GOP is hypocrytical about this. I don't recall Bush making a big deal about the bonuses like Obama did. Perhaps he did I don't remember.
Also, I know that Geithner was right in there as head of the Fed with Bush Treasury when they were negotiating the first bailout so he should have communicated with President Obama as to what was going on. It could have prevented this bonus distraction and saved Dodd the headache of having to change his story.
geithner was not head of the fed. the only thing bush did on bonuses was to make sure that future compensation in bailed out companies wouldn't be restricted either.
short term capital gains are anything that you buy and sell in less than a year and gains are taxed at the same rate as your income bracket. long term gains, property, stocks, etc., held over a year, are taxed at 15 percent. the way i understand the issue being addressed in 2007 is that the hedge fund traders were paid a small amount of salary, and then the rest was in, here's that word again, bonuses. the bonuses were declared to be long term capital gains, taxed at a maximum 15 percent, instead of as income, which is what they are. you are not investing in anything, the reason for the 15 percent rate, working at a job. we can't keep starving government of income and at the same time keep passing spending programs. and yes, that means the democrats too.
I agree with you on the tax rates. I misspoke on Geithner he was head of the New York Federal Reserve Bank but was involved in that first round of bailouts with Paulson.
http://www.latimes.com/news/la-fi-aig16-2009mar16,0,6997051.story?page=2&track=rss
how involved he was is a matter of opinion. the quote in that article is from a person not involved in the process. it was the bush administration making the decisions.
Obama didn't make a big deal, WE DID ! The taxpayers spoke loudly.
I don't remember Geithner being head of the treasury during Bush's governance.. Do you have a link to provide and prove this new information ?
I retract this post. Already answered.
I have read the stimulus bill all the way through and cant find anywhere in there where it states that these bonuses are in there. If it is there can somebody please tell me what page and section it is stated. Faux news is still stating that it is there.
how actively geithner was involved is a matter of opinion. it was still the bush administration making the decisions. the person quoted in that article was not part of the process.
see above
I agree the Bush Administration has to be held responsible for the ultimate decisions made last fall. My point is that Geithner is the link between the 2 administrations and for some reason was deemed to be indispensable by Obama. I haven't seen why up to this point.
Krugman is taking these guys apart with what they are coming up with to "fix" this problem. It's not just a right-wing criticism.
he's not really the link. just because he was head of the new york fed doesn't mean he had any substantial involvement in this.
This is a direct quote from the NYT:
As president of the New York Federal Reserve since 2003, Mr. Geithner has been a central player in building the vast bailout plans that the government has extended to Wall Street firms and other troubled financial institutions, such as the giant insurer American International Group.
You can choose not to believe it, but it would be nice if you brought some evidence for that belief because I've read in multiple sources that he was hewavily involved.
And the fact that Obama considered him to be so invaluable for his new position within the administration reinforces to me that he was very involved and helped the Bush Administration craft these bailouts.
and who actually said that? do you have a link? one of those "multiple sources" you provided in the los angeles times was just some guy commenting. and your fact is a non sequiter. maybe obama just considers him well qualified.