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White House press secretary Robert Gibbs attempted to deflect blame for the AIG bonus scandal away from the Obama administration by reminding reporters that Treasury Secretary Tim Geithner inherited a bad situation and had to make the best of it when he took over from the Bush administration.
"White House press secretary Robert Gibbs attempted to deflect blame for the AIG bonus scandal away from the Obama administration by reminding reporters that Treasury Secretary Tim Geithner inherited a bad situation and had to make the best of it when he took over from the Bush administration.
"The Secretary of Treasury did as much in his legal power at the time to lessen the impact of what we all understand is outrageous," Gibbs said during a Tuesday afternoon press conference. "Let's make sure that everybody understands that there was a change in administration between September of 2008 and what we were talking about sometime last week,"
President Obama's Monday call to "pursue every single legal avenue" in recouping the executive bonuses has been taken up by members of Congress, who have proposed several measures to claw back the money.
Gibbs told reporters President Obama continued to have "complete confidence [in Geithner]."
He added that he didn't think it was fair to blame the cerebral Geithner for not anticipating the populist anger over the executive bonuses. That anger has created a public relations obstacle that Obama must overcome in his efforts to secure Congressional support for further bailouts. One Republican senator even went so far on Monday to say the executives should commit ritual suicide.
"I think it would be very unfair based on the actions the Secretary of Treasury took as we got closer to the pending legal deadline to restructure what could be restructured [in the AIG bailout agreement]," Gibbs said. "The Secretary did good work in changing what was potentially out there."
Key Republicans on Capitol Hill blasted the Treasury Department and the Federal Reserve on Wednesday for orchestrating an $85 billion bailout of insurance giant American International Group, and the White House for not informing them of the plan.
Meanwhile, Democrats blamed the Bush administration for the financial crisis, while the White House pointed a finger at Congress.
The criticism came a day after lawmakers were surprised by the news that taxpayers would again be called on to shore up a member of the struggling financial sector.
"Once again the Fed has put the taxpayers on the hook for billions of dollars to bail out an institution that put greed ahead of responsibility and used their good name to take risky bets that did not pay off," said Sen. Jim Bunning, R-Kentucky, a member of the Senate Banking Committee.
A spokesman for Sen. Richard Shelby of Alabama, the top Republican on the committee, said the senator "profoundly disagrees with the decision to use taxpayer dollars to bail out a private company" and is upset the government has sent an inconsistent message to the markets by bailing out AIG after it just refused to save investment bank Lehman Brothers from bankruptcy.
"The American taxpayer should not be asked to unwillingly assume the inordinate risks that financial experts knowingly undertook, particularly when taxpayer exposure is increased by the ad hoc manner in which these bailouts have been engineered," said Shelby's aide, Jonathan Graffeo. Video Watch how bailout affects taxpayers »
Republican Rep. Roy Blunt of Missouri complained about not getting a heads-up about the bailout and said House Republicans are struggling to "understand a coherent strategy" about which firms get rescued and which ones don't.
Rep. Adam Putman of Florida, the third-ranking Republican in the House, said the cost is "unnerving" and called on the Treasury Department and Federal Reserve "to dispatch an envoy to the Hill to bring members of Congress up to speed."
"The communications lines are not operating efficiently," he said.
Late Wednesday, the White House agreed to send a top Bush economic adviser and an official from the Fed to brief House Republicans on Thursday, according to a House GOP aide.
Meanwhile, congressional Democrats placed the blame for the crisis squarely on the Bush administration, arguing it failed to aggressively regulate the financial industry.
"The most recent bailout initiated by the Bush administration -- that of AIG -- is just another example that George Bush is a failed manager," said House Speaker Nancy Pelosi, D-California. "Because of the inattention, or a decision on their part to have crony capitalism in our country, Americans across the country are feeling the pain of this."
Pelosi said two House committees would investigate the recent bailouts "to tell us how we can avoid this in the future, what went wrong here and also to look into this issue of fraud and mismanagement" at AIG.
White House spokeswoman Dana Perino said Congress could have done more to head off the crisis.
"I think that Congress needs to take -- before they start throwing arrows -- take a little bit of time for some self-reflection," she said. "But also, why don't we just set that aside for a minute and focus on the fact that we have a crisis that we're trying to manage."
Senate Majority Leader Harry Reid -- who also complained that he didn't know a bailout of AIG was in the works -- said Congress won't change laws immediately to address the rapidly unfolding financial crisis because "no one knows what to do."
"We are in new territory here," Reid added. "You could ask [Federal Reserve Chairman Ben] Bernanke, you could ask [Treasury Secretary Henry] Paulson. They don't know what to do, but they are trying to come up with ideas."
Reid said he will keep the Senate in session through the end of the year so committees can hold hearings and start writing legislation that he said could become law next year.
"It's a multitrillion-dollar issue that's facing America, and we can't do it in some timeline that is unrealistic," Reid said.
Democratic presidential candidate Sen. Barack Obama on Thursday said the bailout plan must "protect the families that count on insurance" from AIG.
He also said the Federal Reserve should make sure the bailout plan protects well-paying jobs and helps Americans pay their bills.
At a town hall meeting in Grand Rapids, Michigan, Republican candidates Sen. John McCain and Gov. Sarah Palin both called for reforming the financial markets "in Wall Street and Washington," as McCain put it.
"We're going to reform how Wall Street does business and put an end to the greed that has driven our markets into chaos," McCain said. "We'll put an end to multimillion-dollar payouts to CEOs who have broken the public trust. We'll put an end to running Wall Street like a casino. We'll make businesses work for the benefit of their shareholders and employees, and we'll make sure your savings -- IRA, 401(k) and pension accounts -- are protected."
Originally posted by jam321
On top of that contracts cannot be broken. If contracts were signed by employees then I expect AIG or any other company to fulfill them.
Would AIG been able to pay the bonuses if they hadn't received the bail out?
I'm not being sarcastic, it's a genuine question.
~from OP quote source~
White House press secretary Robert Gibbs attempted to deflect blame for the AIG bonus scandal away from the Obama administration by reminding reporters that Treasury Secretary Tim Geithner inherited a bad situation and had to make the best of it when he took over from the Bush administration. [...]
While the Senate was constructing the $787 billion stimulus last month, Dodd added an executive-compensation restriction to the bill. That amendment provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009” -- which exempts the very AIG bonuses Dodd and others are now seeking to tax.
The amendment made it into the final version of the bill, and is law.
Separately, Sen. Dodd was AIG’s largest single recipient of campaign donations during the 2008 election cycle with $103,100, according to opensecrets.org.