This Week in Scandals: Bonus Overkill

by Alexandra Andrews
ProPublica, March 20, 2009, 4:02 p.m.

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Every week, we take stock of how the week unfolded for the stories we’re tracking in Scandal Watch (see the right sidebar). Here is how we do it. And, as always, feel free to suggest new scandals.

1. AIG

The U.S. has doled out hundreds of billions of dollars to financial institutions, but it took just $165 million to trigger a nationwide catharsis of pent-up bailout anger. That’s how much AIG awarded to executives in its financial products division (which churned out the credit default swaps that nearly wiped out the company) last Friday. (AIG has gotten $173.3 billion in federal bailout money. Here’s our timeline of AIG’s bailouts and bonuses and a Q&A on the bonuses.)

CEO Edward Liddy, installed after the initial bailout, said Federal Reserve Chairman Ben Bernanke had signed off on the bonuses. But the administration’s official stance is that Treasury Secretary Timothy Geithner only learned about the bonuses on March 10, and President Barack Obama was alerted two days later. But Bloomberg News reported the bonuses back in January, and according to the New York Times, Geithner was questioned about them at a congressional hearing on March 3 and Treasury and Fed staffers were e-mailing about them in late February. (Treasury said last night that Geithner didn’t know “the timing or full extent” of the bonuses until March 10.)

Anger over the bonuses has crystallized into an effort to get them back, centering on a bill the House passed yesterday that would levy a 90 percent tax on bonuses at banks that got more than $5 billion in bailout funds. Nineteen state attorneys general and the Treasury have opened probes into the bonuses. Meanwhile, some say the real AIG outrage is the $49.5 billion in rescue funds that the company used to pay off its counterparties.

2. Market Crisis

Fannie Mae is also handing out retention bonuses to its top executives, which the federal government signed off on. But Rep. Barney Frank (D-MA) said the bonuses are rewarding poor performance and should be stopped. According to the Wall Street Journal, other companies with big losses are still handing out big bonuses to their execs too.

Meanwhile, Bank of America has complied with a judge’s order and handed over the names of the 200 Merrill Lynch employees who received the biggest bonuses. (Most of those Merrill bonuses wouldn’t be taxed under the House’s bill though, because they were moved up from January 2009 to December 2008, the New York Times reports.)

Bank of America CEO Ken Lewis also told the Charlotte Observer that the bank may pay back the government’s bailout by next year. And finally, Rep. John Lewis (D-GA) is angry that at least 13 companies that got bailout money owe the U.S. a total of more than $220 million in back taxes.

2 comments

Barry Schmittou

March 20, 2009, 6:11 p.m.

This is just a small portion of the criminal actions that insurance companies are involved in.

The White house has just acknowledged receipt ( but have chosen to ignore) my evidence, including quotes from numerous U.S. Judges, that prove large numbers of injured workers and disabled people in the U.S. are having their lives endangered by insurance companies that intentionally ignore life threatening medical conditions. You can see the evidence by going to http://www.fiduciaryfraudevidence.blogspot.com and http://www.judgesquotes.blogspot.com

No insurance company objected to or denied the evidence when I had it placed on the docket of the U.S. Supreme Court. The pro business Supreme Court Justices did nothing in spite of the destruction of so many lives !!

Purple Girl

March 22, 2009, 7:19 a.m.

This has been the unveiling of a Huge Orgnaized Crime Syndicate. While the ‘streeters’ were embezzling and conning investors, AIG was helping launder the money. Those who were referred to as ‘Rating’ Agencies were the Oz’s which gave them all ‘legitmacy’ and ’ creditablity to perpetuate the Con.
Paulson & Bereneke acted as the ‘GodFathers’ notonly orchestrating this Syndicates operations- but personally Extorted moeny from the American people. Paulson had that 2 1/2 page ransom note in his desk for 6 MONTHS! Just waiting until the moment got so dire that congress would be easily coerced “Pay Up or the whole thin goes Down in flames”.
Had this been a isolated or regional issue, RICO charges would have sufficed- but it didn’t, this meltdown spanned across the country and throughout the world.They caused our economy to tank by waiting to act- 6 months proves forethought and malice- so economic treason charges are appropriate.
Beyond that is the fact that many poor nations depend on US funds and charitable donations for their citizens survival. If our GDP is in the toilet, US funds will be reduced if not eliminated. Citizens who are in fear of becoming homeless themselves have closed their wallets- so charities who provide food & medical care are suffering. This leads to human deaths in larger numbers than just last year. This Well foreseen and avoidable global catastrophe constitutes a Crime against Humanity.
so let them keep their bonus’ they are subject to a Freeze & seize upon charges Udner the RICO statues. And if the 2 High crimes are prosecuted and punishments are levied- ‘Ya can’t take it with you’, Nor can their families retain Ill gotten gains (blood money).
Accepting money in the process of committing a criminal act constitutes complicityand culpability. How’s those bonus’ looking now- like millions of Statements of confession? Not only return the blood money,but start turning states evidence- Better to Sing than Swing.

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