NBC Nightly News ignores Goolsbee rebuttal in reporting GOP "power grab" attack
Research ››› ››› JEREMY HOLDEN
Reporting that Tim Geithner and Ben Bernanke appeared before a House committee hearing "with a request for more authority that some critics are already calling a power grab," NBC's Kelly O'Donnell did not note White House economic adviser Austan Goolsbee's response that had "we had resolution authority now, we could have dealt with the issue of bonuses."
On the March 24 edition of NBC's Nightly News, Capitol Hill correspondent Kelly O'Donnell stated that Treasury Secretary Timothy Geithner and Federal Reserve chairman Ben Bernanke appeared before a House Financial Services Committee "that wanted to know how and why they let AIG pay out bonuses with taxpayer money," and reported that Geithner and Bernanke came "with a request for more authority that some critics are already calling a power grab." But O'Donnell did not note in her report that White House economic adviser Austan Goolsbee had specifically responded to that criticism during an interview earlier that day on MSNBC. During the March 24 edition of MSNBC Live, chief Washington correspondent Norah O'Donnell stated of the administration's proposal to establish resolution authority for non-depository financial institutions, "[House Minority Leader John] Boehner [R-OH] is calling it an unprecedented grab of power -- this new authority." Goolsbee replied: "I totally disagree that to have a resolution authority is a power grab. We need -- if we had resolution authority now, we could have dealt with the issue of bonuses. We could have dealt with the issue of AIG strapping a hedge fund on its back."
Goolsbee also stated on MSNBC, "[Y]ou had an insurance company that strapped a rocket-fueled hedge fund on their back and kind of flew around out of control and ended up costing the taxpayers $170 billion."
On the March 24 edition of Fox News' Special Report, Fortune magazine Washington editor Nina Easton also criticized Boehner's comments as an attempt "to score a lot of political points," saying, "I think the Republicans, in the case here of John Boehner, are making political hay out of this, on trying to score a lot of political points, because this is an idea that's been around for at least a year." She later stated, "What they're trying to do is extend that to other non-bank but financial institutions that pose a systemic risk. It's definitely an idea worth looking at. I don't think it's a Geithner power grab."
From the March 24 edition of NBC's Nightly News with Brian Williams:
O'DONNELL: The Treasury secretary and Chairman of the Federal Reserve were here and, in political terms, that means they were dragged before a House committee that wanted to know how and why they let AIG pay out bonuses with taxpayer money, while Geithner and Bernanke came here with a request for more authority that some critics are already calling a power grab.
[begin video clip]
O'DONNELL: Demanding answers from the nation's top moneymen, the House committee was short on patience.
REP. MICHAEL CASTLE (R-DE): Can you tell us when you first really knew that these bonus payments to AIG would be made?
GEITHNER: I was briefed by my staff on March 10th.
BERNANKE: I was not personally informed about this specific set of payments until March the 10th.
O'DONNELL: But Treasury, the Federal Reserve, and congressional leaders had copies of the AIG bonus contracts for months before that. And Treasury Secretary Timothy Geithner said, in effect, he dropped the ball.
GEITHNER: I knew that we had a big mess on the compensation side to deal with. But I did not have -- I should have had -- but I did not have detailed knowledge of these particular legally contracted retention bonuses for AIFP.
O'DONNELL: Today, Geithner and Federal Reserve chairman Ben Bernanke came here with a new explanation. They said they had wanted to cancel the bonus payouts but were told, if they broke those contracts and lost in court, AIG execs could have gotten an even bigger payday.
BERNANKE: Legal action could thus have the perverse effect of doubling or tripling the financial benefits to the AIGFP employees.
O'DONNELL: The rules gave House members only five minutes each. That led to rushed and tense exchanges like this, demanding Geithner list all the bailed out executives who were paid more than $1 million.
[begin video clip]
REP. BRADLEY SHERMAN (D-CA): Are you going to give us the chart, or you going to hide the ball?
GEITHNER: I'm not -- I'm not going to hide the ball.
SHERMAN: Are you going to give us the chart?
GEITHNER: I will reflect on the suggestion you made.
[end video clip]
O'DONNELL: Geithner had his own suggestion, a request for Congress to grant broad new power to Treasury, making it able to take over failing institutions. The government already has that authority over banks, but not other kinds of financial companies.
GEITHNER: We need to work together to create an environment where it's safe to save and invest, and where all Americans can trust the rules governing their financial decisions.
[end video clip]
O'DONNELL: And, Brian, we've already seen some of the top recipients of the AIG bonuses giving that money back. And next, the debate begins about whether Treasury should get this expanded power. Would it help taxpayers to feel more secure that greedy practices wouldn't get in the way, or would it be too much control in the hands of Treasury already in the middle of this financial mess? Brian:
BRIAN WILLIAMS (anchor): Kelly, thanks. Kelly O'Donnell starting us off on Capitol Hill tonight.
From the 3 p.m. ET hour of the March 24 edition of MSNBC Live:
GOOLSBEE: I think what happened with AIG -- before we got to the bonuses -- what happened with AIG was an outrage, and it points to the need for regulatory reform, and a resolution authority, as the president has discussed and Secretary Geithner has discussed, because --
O'DONNELL: John Boehner is calling it an unprecedented grab of power -- this new authority.
GOOLSBEE: He's calling -- well, look, the thing is, you had an insurance company that strapped a rocket-fueled hedge fund on their back and kind of flew around out of control and ended up costing the taxpayers $170 billion. And now at this point, an institution like AIG, because we regulators hadn't thought that such an entity could exist --
O'DONNELL: You think John Boehner is crazy?
GOOLSBEE: -- we don't have a -- I'm not saying he's crazy. I'm just saying I totally disagree that to have a resolution authority is a power grab. We need -- if we had resolution authority now, we could have dealt with the issue of bonuses. We could have dealt with the issue of AIG strapping a hedge fund on its back. So I really think we need that.
O'DONNELL: Very interesting. I think you just made some news there. Austan Goolsbee, thanks so much. We appreciate it.
From the March 24 edition of Fox News' Special Report with Bret Baier:
[begin video clip]
GEITHNER: The U.S. government as conservator or receiver would have additional powers to sell or transfer the assets or liabilities of the institution in question, to renegotiate or repudiate the institution's contracts, and prevent certain financial contracts with the institution from being terminated on account of conservatorship or receivership.
BOEHNER: This is an unprecedented grab of power. And before that occurs, there ought to be a real debate about whether we should give that authority to the Treasury secretary.
[end video clip]
BAIER: Treasury Secretary Timothy Geithner up on Capitol Hill before the House Financial Services Committee today, asking lawmakers for new power -- unprecedented power -- to regulate non-bank companies like AIG, an insurance company, whose collapse could endanger the broader economy, a systemic risk.
What about this? Let's bring in our panel: Fred Barnes, executive editor of The Weekly Standard; Nina Easton, Washington bureau chief of Fortune magazine; and Juan Williams, senior correspondent of National Public Radio.
Nina, let's start you with.
EASTON: Well, first of all, I don't think that -- I think the Republicans, in the case here of John Boehner, are making political hay out of this, on trying to score a lot of political points, because this is an idea that's been around for at least a year. Hank Paulson, the former Treasury secretary under Bush, was proposing it.
The problem is -- and the idea was how do we avoid these ad hoc, chaotic, and expensive bailouts of these huge financial institutions? AIG was regulated -- is an insurance company. It's mostly regulated by the states. It wasn't -- there was nobody overseeing a lot of these instruments that caused the problem at the end of the day.
So, it's not -- it's -- yes, there should be debate, and it shouldn't be rammed through, which I think a lot of -- the White House is trying to do with a lot of this stuff, but it's not that much different. And, again, when you say unprecedented, it's not that much different than the FDIC can go in and take over banks and sell off those assets.
What they're trying to do is extend that to other non-bank but financial institutions that pose a systemic risk. It's definitely an idea worth looking at. I don't think it's a Geithner power grab.
BAIER: All right. Well, we should point out there were some Democrats in both the Senate and House side that had concerns about it today as well. Fred?
BARNES: I agree it's an idea worth looking at, and then killing. It's a terrible idea. There's no need for it. And, look, to give these people -- it's not that they've handled the power they already have so well. They've done a terrible job so far.
And the stuff that they want to do -- you know, they seize a couple of phrases, "too big to fail," and "systemic risk," and say, because of these, we have to go in and regulate investment banks and then -- and insurance companies and hedge funds and so on.
The truth is banks are different. Banks -- the federal government guarantees the deposits of all the people who have money in the banks up to a certain point. Then a -- look, the money the people invest in hedge funds are not insured by the government. And if there were some -- if they could point to some evidence of why they need to do this -- look, Lehman Brothers failed. There was no systemic risk there. It sort of froze credit for a while.
But a systemic risk would mean that if one institution fails, then others will. There will be a domino effect. It didn't happen with Lehman Brothers. I think they could have let AIG fail, stripped off the financial stuff -- the insurance company was sound -- and done that.
Here they are, once again, using the whole economic and financial problem that we have, trying to seize all this power that they don't need.
One more thing: If you really want to do something, worry about these outfits getting too big to fail, all you have to do is apply higher capital requirements as they get bigger, or penalties if they don't meet those capital requirements. That's all. You don't need to jump in and set the pay for the CEOs, which is another thing they want to do.
EASTON: Just one quick point: that the taxpayers ended up guaranteeing in the case of AIG. I mean, it's --
BARNES: Well, yeah, but I'm saying they didn't have to bail out AIG. Of course they did. I think that was a mistake.
WILLIAMS: But they did, and it wasn't Democrats who did it at the time. It was the Bush administration. So --
WILLIAMS: -- from my perspective -- well, what I'm saying is this is not a partisan power grab.
BARNES: I didn't say it was. I just said it was a terrible idea.
WILLIAMS: Well, the reason I think it's a good idea is, look, the taxpayer is the guy that keeps getting stuck with the bill in this game. And here you have an opportunity for someone who's representing the taxpayer to say, "We are going to now take a look early on. And we're going to look, not just at the banks, we're going to look at the investment companies, the insurance companies. And if you are on the verge of some kind of catastrophic collapse that's going to endanger domino-style the rest of the economy, we are going to intervene."
That seems to me to be prudent. It doesn't seem to me to be a power grab.
BAIER: Isn't there a lot of trust inherent here in how the government handles this stuff?
WILLIAMS: Tremendous. And it opens, without a doubt, it opens the door, and we've seen it today -- Michele Bachmann and others saying, "Socialism; this is socialism. What's going on here?" And John Boehner -- you know, John Boehner said this is beyond the pale.
But the fact it --
EASTON: You already have this in ad hoc form. This is already happening. It's already happened. What this does is set it up and make it a much more predictable and, in some ways, transparent form, because this is -- look, this is how we're going to intervene. This is the means by which we're going to intervene instead of this ad hoc sort of -- you know, this is going to cause a crisis --
BARNES: If these people had done so well --
EASTON: -- but Lehman Brothers isn't.