Wash. Times gives false GOP suggestion that Bush administration played no role in AIG bonus controversy

Media Matters:


In a March 23 article about the GOP's strategy to use "furor" over AIG bonuses to boost its congressional election chances in 2010, The Washington Times' Sean Lengell reported that "the Connecticut attorney general said AIG papers showed that the company paid out $218 million in bonuses -- $53 million more than had been disclosed previously." Lengell went on to report that "[t]he blame, Republicans say, rests squarely with the Obama administration and Democratic leaders in Congress for including a provision in the $787 billion economic-stimulus package last month that allowed AIG executives to receive their bonus checks" and quoted Republican strategist Dave Winston asserting of Democrats:

"This is their action. This is not something they can point to George Bush. ... They own the issue of giving bonuses to the AIG executives." At no point did Lengell note that the $53 million in bonuses to AIG that the article mentioned were reportedly paid out in December under the Bush administration, or that Neil Barofsky, a Bush-appointed special inspector general for the Troubled Asset Relief Program (TARP), stated in March 19 congressional testimony that the Bush administration Treasury Department knew about the AIG bonus contracts and did not insist on their abrogation as a condition of AIG's receiving bailout money.

In prepared testimony for a March 19 House Ways and Means Committee hearing, Barofsky stated, "Preliminary information we have seen indicates that the TARP contract between AIG and Treasury that was entered into back in November specifically contemplated the payment of bonuses and retention payments to AIG employees, including AIG's Senior Partners." He also stated that his office "will be reviewing the process at Treasury with respect to Treasury's decision to authorize and approve such payments, both at the time it entered into the contract with AIG and since that time." During an exchange with Rep. Peter Roskam (R-IL) in the hearing, Barofsky explained that in AIG's November 2008 agreement with the Bush Treasury Department, "retention payments were explicitly contemplated." From the testimony (transcript retrieved from the Nexis database):

REP. ROSKAM: You mentioned the online aspect of the disclosure of the TARP agreements. Would those online disclosures, as they're currently exercised by Treasury, would they have revealed the AIG problem?

MR. BAROFSKY: It would have revealed that in the AIG agreement with Treasury, retention payments were explicitly contemplated. It didn't list the contracts; it didn't list the amounts, but in the executive compensation provisions, there's an explicit reference to retention payments in calculating the total amount of payment a senior executive could receive. So that issue was, in fact, in those agreements.

REP. ROSKAM: So is it fair to say that if they had been online, that issue would have been red flagged and certainly drawn attention in advance to the problem?

MR. BAROFSKY: Potentially. I'm not sure of the exact date that the AIG agreement did go up on the Internet. Our recommendation was sort of adopted in waves after it was made in late December and is now being fully complied with. But I'm not sure the exact date the AIG agreement went up.

REP. ROSKAM: I understand.
Thank you. I yield back.

The executive compensation section of the Bush Treasury Department's November 2008 TARP agreement with AIG addresses the "annual bonus for 2009" for "Senior Partners," including "all retention payments paid or payable to such Senior Partner under any retention arrangement between the Senior Partner and the Company for any period ending on or prior to March 31, 2010." The section states that such bonuses "shall not exceed 3.5 times the sum of such Senior Partner's base salary and target annual bonus for 2008" and does not mention retention payments for other AIG employees.