Dems, Issa Dispute AIG "Hypocrisy" Claims

GOP Lawmaker wants Geithner to resign in fallout from AIG bonus.

March 20, 2009, 7:43 PM

March 21, 2009 -- Earlier this week, Rep. Darrell Issa, R-Calif., the ranking member on the House Oversight Committee, called for Treasury Secretary Timothy Geithner to step down in the fallout from the AIG bonus scandal.

"Secretary Geithner either didn't know about the bonuses, and was grossly negligent, or he did know and failed to bring this to the president's attention," Issa said. "Either way, the end result has been a significant waste of taxpayer dollars, and he should take immediate responsibility and resign."

But should Issa have been outraged?

The California lawmaker received a letter about the AIG retention program back on Dec. 16, 2008, when Rep. Elijah Cummings, D-Md., asked him and Rep. Edolphus Towns, D-N.Y., chairman of the House Oversight Committee, to call a hearing on AIG's compensation policies.

"It's regretful that Mr. Issa didn't feel this same outrage back in December when this was all taking place under the previous administration's watch," a Democratic aide told ABC News. "You know, it really makes it difficult to take his criticism of Geithner as anything other than hypocrisy when he waited until it was politically expedient to come forward about information he received months ago."

The committee has yet to hold a hearing on AIG.

On Saturday night, a spokesman for Rep. Issa responded by providing ABC News with a proposed letter that Issa asked Towns to send to Treasury in January.

In the proposed letter, Issa did not specifically mention AIG's retention program, but he did want to request all "TARP-related contracts" between Treasury and the 10 largest companies receiving bailout funds, including AIG, as well as all "records or communications" between Treasury and these companies regarding any provisions or conditions placed on them.

Said Issa's spokesman Frederick Hill, "In January, his first month as Ranking Member, Rep. Issa requested that Chairman Towns join him in requesting documents from the department of the Treasury pertaining to companies including AIG."

"Had Chairman Towns agreed to this request, light might have been shed on the executive bonuses Rep. Cummings, Rep. Issa, and others have been concerned about," Hill said. "Chairman Towns, however, would not agree to join with Rep. Issa in requesting these AIG documents from the department of the Treasury. Only letters signed by Chairmen are enforceable."

Said Hill, "This request could have found critical information about AIG bonuses but the Chairman wouldn't sign."

He added, "Clearly Democrats on the committee are frustrated by the disconnect between what the committee's majority leadership talks about doing and the lack of action that follows. It's unfortunate that some Democrats have chosen to express this frustration through false partisan attacks."

Responded the Democratic aide, "Issa's arguments are all completely irrelevant. He's trying to shift the focus away from the point, which is that he sat on this information for months until he had the chance to launch an attack on the Obama administration for actions undertaken under former Treasury Secretary Paulson. Why wasn't Issa expressing the same outrage asking for Paulson to resign when he learned about the payments months ago?"

But Issa's office points out that the lawmaker was critical of the Bush administration's handling of the Troubled Asset Relief Program in a November interview.

"It was disingenuous in the way that the administration came to us with a crisis which ultimately could not have been a crisis as described because the money has not, in any way, shape or form, been used as it was asked for," Issa said on PBS's NewsHour with Jim Lehrer on November 14.

Reached on Sunday, a spokesperson for Cummings confirmed that the Maryland representative did send the letter to Issa and Towns.

Jennifer Kohl said Cummings' office had not heard anything from Issa about AIG's retention program until last week.

She said Cummings had "multiple conversations with Towns since December" and that Towns, as chairman the only person who can schedule a hearing, had scheduled one for April 2.

Ron Stroman, a spokesman for Towns, said that due to the change in chairman from Rep. Henry Waxman, D-CA, to Towns, the committee had to hire a completely new staff and review all the material left over from Waxman.

"You've got to move deliberately here," Stroman said. "You want to make sure you've got all the information in place before you start sending out letters. And you want to have a staff in place. You want to move quickly, but you also want to move correctly."

Added Stroman, "The AIG issue is a complex issue and one that includes bonuses and other financial issues as well. In order to adequately plan a hearing, it's important that you have a full understanding of the scope of the problem and that your hearing is focused on those problems."

In the letter to Issa and Towns, Cummings stated, "I write today to request that you convene in the full Committee on Oversight and Government Reform a hearing to examine American International Group Inc.'s (AIG) use of taxpayer dollars, specifically with regards to compensation policies and expenditures and corporate events."

"In a series of letters to AIG, I have repeatedly requested information from the firm about the compensation it is providing to its employees -- and particularly about the so-called "retention payments" -- the firm is apparently awarding," Cummings said.

The Maryland lawmaker had written to AIG CEO Edward Liddy Dec. 1, 2008, asking questions about the insurance giant's retention program.

On Dec. 5 Liddy replied, telling Cummings that 168 employees would receive payments in the program.

On Dec. 9 Cummings wrote back to Liddy with more questions.

A week later, Cummings requested the hearing, calling for Liddy to testify under oath.

"I think it is critical that the Committee seek to understand whether (1) AIG has revealed the full extent of its compensation policies to officials with either the Department of Treasury or the Federal Reserve and (2) whether, if the Federal Reserve and/or the Department of Treasury are fully aware of AIG's compensation policies, either or both has approved AIG's issuance of retention payments (or any other type of bonuses) as part of the firm's compensation package. For that reason, I would urge that officials from these entities should also be called to testify at a hearing that examines AIG's compensation policies.

"As representatives of the taxpayers that are literally keeping AIG afloat, Congress has the right and indeed the duty to demand from AIG a full accounting of the funds provided to it. Therefore, I strongly urge you to convene a hearing as soon as possible."

It wasn't until last Wednesday's hearing -- held by a different House committee -- that Cummings finally got his chance to go after Liddy on Capitol Hill. And he wasted no time teeing off on the embattled executive. Liddy had earlier said the $165 million in retention payments was "distasteful," but Cummings pointed out that it was Liddy who approved retention payments for 168 executives and then expanded the program to include more than 2000 employees. When asked how many total retention payments he has approved, Liddy estimated the number was between 4,500 and 4,700.

The House Oversight committee has now scheduled a hearing on AIG for early next month, nearly four months after Cummings' letter.

ABC News Live

ABC News Live

24/7 coverage of breaking news and live events