Key House Dem: Pay Czar Should Say No to AIG Bonuses

Jul 13, 2009 2:23pm

ABC News’ Rick Kleinreports: A leading House Democrat is pressuring the Obama administration’s “pay czar” to refuse AIG’s request to distribute more than $230 million in bonuses to its employees. Today on’s “Top Line,” Rep. Elijah Cummings, D-Md., a senior member of the House Committee on Oversight and Government Reform, said that pay czar Kenneth Feinberg should turn down the company’s request for his blessing, to send a “blunt message” that bonuses are not acceptable until companies return bailout funds to taxpayers. While AIG could go ahead with the bonuses without Feinberg’s approval, AIG is looking for “political cover” that the Obama administration shouldn’t provide, Cummings said. “The president and certainly . . . [Treasury] Secretary [Tim] Geithner have said any pay raises or any bonuses should be tied to performance and should not lend themselves to riskier types of transactions. Clearly, there has been nothing so far that’s shown that AIG has performed very well,” Cummings told us. ” We really don’t know what the status is with regard to AIG. One thing we do know: They haven’t paid any of the $180 billion dollars that they owe the American people. Why should they be getting bonuses when millions of Americans are out of work?” Cummings today sent a letter to Feinberg, the “special master” for TARP Executive Compensation, asking him to turn down AIG’s request to pay additional bonuses “to reiterate the views of President Obama and the American people.” Cummings acknowledged that Congress is essentially powerless to halt the payouts, despite calls from both Democrats and Republicans for tighter control over bonuses awarded to companies receiving TARP funding. “I’ve been warning the Congress to try to do something,” Cummings said. “And now we appeal to Mr. Feinberg and I think he can send a very blunt message out: ‘Look guys, why don’t you get it together. At least pay the American people a dime of their $180 billion, and maybe people will feel better about you. But right now, from a political and from a public relations stand point just, just hold on.’ ” Andrew Williams, a Treasury spokesman, said in a prepared statement that Feinberg will “help ensure that companies strike the right balance around their need to retain talent, reward performance, and protect the taxpayers’ investment.  Obviously, we all have a shared interest in ensuring that those companies can return to profitability as soon as possible so that taxpayers can recoup their investment.” Williams continued: “Companies will need to convince Mr. Feinberg that they have struck the right balance to discourage excessive risk taking and reward performance for their top executives. That process is just beginning now, and Mr. Feinberg has begun consulting with those firms about their compensation plans. We are not going to provide a running commentary on that process, but it’s clear that Mr. Feinberg has broad authority to make sure that compensation at those firms strikes an appropriate balance.” On a separate issue, Cummings told us that he supports President Obama’s efforts to counsel patience regarding the economy. Asked if there’s a need for a second stimulus, he said: “Not yet; I think we need to let the first one work. Keep in mind only 10 percent of the money has been dispensed so far. And also, keep in mind that the jobs rate is the thing that lags behind even when the economy comes back. But I gotta tell you that we’ve gotta get more of this money out the door faster. There are a lot people suffering. You know, if you look at the African-American unemployment rate, it’s double what the national average, is and Hispanics is similar. So we’ve got to get this money out the door. ” Click HERE to see the full interview with Rep. Elijah Cummings.
Also today, we checked in on the latest in the Supreme Court confirmation hearings of Judge Sonia Sotomayor with ABC’s Jan Crawford Greenburg, who covers the Court for us. Among the buzz of the morning: What was Sen. Lindsey Graham, R-S.C., up to with his opening statement? Click HERE to see the interview with Jan Crawford Greenburg.
ABC’s Matthew Jaffe contributed to this report.

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