Washington Post Claims Obama Admin Lied About AIG Bonuses


Federal Reserve officials knew for months about bonuses at American International Group but failed to tell the Obama administration, according to government and company officials, exposing problems in a relationship that is vital to addressing the financial crisis.

This claim is not sitting well with Democrats.

“I’m sick and tired of hearing the administration and the Secretary of the Treasury say, ‘I just found out about it,’ ” Rep. Paul E. Kanjorski (D-Pa.) said yesterday.

The Washington Post points out that Obama’s Treasury Secretary’s in fact knew about the bonuses months ago.

AIG officials met with Geithner and then Treasury Secretary Henry M. Paulson Jr. in New York on Sept. 14 to warn them of the dire threat posed by the derivative business developed by AIG’s Financial Products unit. Executives told the two men the firm needed help but had at least a week before it faced collapse, sources said. Paulson left for Washington. But Geithner stayed up all night with officials at the New York Fed to examine AIG’s situation. He discovered not only an enormous number of complicated trades, estimated at $2 trillion, but that AIG had backed retirements funds across the nation. He also realized that a collapse of AIG was imminent, and that the fallout would ripple across the banking system, sources familiar with the episode said.

The Washington Post cites multiple sources including the corroboration from the Treasury Dept’s own PR people.

While declining to answer questions about the AIG bonuses, Fed spokeswoman Michelle Smith said in a statement: “The Fed and Treasury officials have coordinated closely on all aspects of the U.S. government’s support for AIG during this extraordinary period.”

The Fed officials did not anticipate the political firestorm that would erupt over the bonuses, a senior government official said. “They clearly underestimated the matter,” the source said.

And so it is that even the far left Code Pink wackos are calling for the Treasury Secretary’s resignation or removal. Sadly, President Obama has so far broken his campaign promise to CHANGE the way Washington works, and instead he’s standing by his man for no other reason and with no other fallout other than having to own up to his mistake in hiring a tax cheat to run the IRS.

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I guess Dems don’t even read the NY Times. This whole thing was report there in Nov.

This is hilarious watching them shooting at themselves. They are taking no prisoners, but they don’t realize they are attacking their own. This whole scandal is getting worse by the day and there could be major casualties, Dodd and Geinther to start.

This could be the first of man black eyes on the Obama administrations



Washington Post Claims Obama Administration Lied About AIG Bonuses

“Federal Reserve officials knew for months about bonuses at American International Group *but failed to tell the Obama administration*”

Do you see a contradiction between your headline and the that excerpt of the WaPo article?

Then you say:

“The Washington Post points out that Obama’s Treasury Secretary’s in fact knew about the bonuses months ago.”

When I read the excerpt below I see no mention of bonuses.

Then your final WaPo excerpt says that Michelle Smith said nothing about bonuses.

To sum up no mention in the WaPo article of the Obama Administration knowing about the bonuses.

I agree with Glenn Beck that AIG is a money laundering front. After all, the bulk of the money went “international.” I don’t know what is worse, the outrageous corruption or playing us for stupid!

I heard a bit of Beck earlier this week and he did a great breakdown of the AIG money.

What I heard no one mention (in relation to the now “concerned” congress wanting to break the contracts, is that no one said a word when the recently home mortage contracts were given permission to be broken by bankruptcy judges (as in the Bankruptcy Judge can “reset” the debt owed on a mortage). If they haven’t done it already, messing with contract law is one GUARANTEED way to destroy capitalism.

America needs to wake up FAST.


If in fact the contracts predated the bailout, the Administration may have been reluctant to break pre-existing contracts.

My understanding is that the contracts were from 2007.
The NYT (IIRC) ran a story on the bonuses in November 2008.
Per the San Jose Mercury News: “AIG disclosed its retention-payment program,” bonuses, “more than a year ago.”

They didn’t know? BS!

@Scott: wasn’t liddy hired after the first round of monies went out? that was the impression i was given somewhere, and if he was hired after then why are they making him the sacrifial lamb? you read anything about law and watch court stuff you know it is difficult to break contracts. i honestly think there was a pay off and that obama and dodd were both in on this and are now trying to cover their respective asses. geithner was put in his positin because he isn’t smart enough to question obama and he is just a lacky for the dems. this is a huge disaster and the fall out is going to be far reaching and seeing how it shakes out should be interesting.

What’s really amusing about his whole thing is that the NY Fed is the organization that engineered the AIG bailout deal from its’ inception.

Who was head of the NY Fed you ask?

Well, none other than Tim Geithner…..yes, that Tim Geithner….Turbo Tax Timmy.

Why yes, he is the Secretary of the Treasury now.

Imagine that.

The very guy who headed up the creation and implementation of the AIG bailout deal last year is now saying “I didn’t know” about the retention bonuses.

So, yes, Turbo Tax Timmy knew about the bonuses.

Turbo Tax Timmy is part of the administration, so if the administration says they “didn’t know” they’re lying.

Finally these people who are shrieking and squealing about taxing this bonus money and canceling contracts need to take a little road trip over to that National Archives so that they can read the US Constitution.

The Constitution prevents the passage of ex-post facto laws, meaning that if something was legal last week when you did it, no law can be passed today which makes past events illegal.

The whole bunch in DC is clueless.

From The Corner:

House Speaker Nancy Pelosi (D, Calif.) deepened the mystery of the AIG bonus clause this morning. In a press conference, she appeared to be claiming that no one from the House had been present at the House-Senate conference committee where AIG the provision was inserted:

“This is Senate-White House language…If you want to talk about what happened in the Senate, go to the Senate and talk to them…It was never brought to conference…This never came to the House side. You can talk to any of our conferees.”

(The Hill offers a more detailed write-up here.) Pelosi’s statement is at least inaccurate in that the bill came to the House side with the AIG provision, and passed on a roll call vote. But if the House Democrat conferees (Charlie Rangel, Henry Waxman, and David Obey) were not present for the House-Senate conference committee, where were they? Were they, like the Republican conferees, locked out of negotiations?

Well, the way I see it, as many of you also point out, is that it is UNCONSTITUTIONAL to not only break binding contracts but also to tax any one specific group (even if they ARE crooks). This is all a “distracting dance” from the Dems, who knew full well what they were doing (money laundering)

After all, if there’s a very easy and LEGAL way to break contracts, LET THEM FAIL and go into bankruptcy.

Someone needs to start keeping track of all the “Constitutional Violations” of our congress. But then, I’m not sure it will matter, since truth itself doesn’t even seem to matter anymore.

What’s the problem, Dave Noble…. Geithner *is* part of the Obama admin, and he did know. The headline is correct.

Ask and ye shall receive, Scott. Here’s the OpenSecrets records of top recipients.

Obama is first, Dodd second. Followed by McCain, then Hillary. But the contributions to the first two is about 1.75% more.

However AIG is like any heavy hitter lobby/contributor. They tend to throw the most money at the parties in power. For example, in 2004, they gave Bush over $160K, and Kerry about $56K.

I would like to see those contracts. Usually contracts have exculpatory clauses for acts of God, acts of government, bankruptcy, etc. which makes it impossible for the fulfillment or performance of the contracts as originally contemplated. AIG was insolvent, the fact that the government inserted money did not mean that AIG had a giant piggy bank that would allow it to claim it was fiscally sound. It had a loan. If AIG had progressed into bankruptcy, which looks more inviting every day, all those contracts would have been voided as they should have been. The bonuses for the half dozen or so former AIG employees who received retention bonuses but already left employment should have been negated. You were to get money to STAY, YOU LEFT, no BONUS, end of story.

eaglewingz08, the time for bankruptcy would be *before* the US taxpayer became 80% owner….

More important, Aye Chihuahua, it’s a Bill Of Attainder. Such bills are specifically outlawed in the Constitution to prevent “trial by legislature” without the benefit of judicial review, targeting specific individuals. You know, part of that pesky “separation of powers” thing? Today’s Mad Dog Congress is doing just that. As if that’s stopped anyone lately…

I pulled this quote from a web site: In the context of the Constitution, a Bill of Attainder is meant to mean a bill that has a negative effect on a single person or group (for example, a fine or term of imprisonment). Originally, a Bill of Attainder sentenced an individual to death, though this detail is no longer required to have an enactment be ruled a Bill of Attainder.

If this does not describe the recipients of the AIG retention bonuses, I don’t know what does. Additionally, it IS ex post facto, much like Algore tried to pull off in the 2000 presidential election.

I’m astonished that this important constitutional term (Bill of Attainder) has not surfaced at all in the dialog lately. Let’s start talking it up, shall we?

“Bills of attainder, ex post facto laws, and laws impairing the obligations of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation.”
— James Madison, Federalist Number 44, 1788.

Update: Ron Paul used the term on the floor of the House today.


You’re correct Doug.

I knew that the bill of attainder description applied here but was posting on the fly a bit.

Thanks for fleshing out the remainder of the issue.

The Federal and State governments have been singling out one specific group of individuals for years with a continual series of increased taxation:

Tobbacco users.

No other legally sold product has had its level of taxation rise so drastically.

Back on subject: Geithner and Paulson failed to represent the people or to even follow the instructions given by the White House and Congress (to set specific conditions for the use of the bailout funds). Why are we so surprised that they all ignored the contractual bonuses? The correct thing for AIG to do would have been to arrange for those bonuses to be paid once they were solvent again. Geithner and Paulson should have told AIG that if they wanted a bailout, they had to tighten belts and not blow money on bonuses and other extravagances. It is not just the Bonuses that have people pissed, it’s also all the other money AIG committed to fund spending unrelated to ending their crisis. For US citizens, the bonuses are simply the straw that broke the camel’s back.

For the politicians, this issue of the bonuses is partially a diversionary tactic. (While the press is focused on this, they are ignoring other very important reports.) More disturbing is that the legislation they passed today is yet another example of their failure to uphold their oaths of office to uphold and protect the Constitution.