Posted on 19 Mar 2009
In the wake of public outcry over retention bonuses paid by American International Group Inc. (AIG), Congressional Democrats are growing increasingly nervous about the ability of Treasury Secretary Timothy Geithner and the Obama administration's economic team to manage the crisis and effectively convey a coherent policy.
On the same day that President Barack Obama expressed "complete confidence" in Geithner, some Democratic lawmakers said the administration’s handling of the bonuses paid by AIG was the latest in a series of missteps that have plagued Geithner and other top officials since the presidential inauguration.
“The economic team has got to get its act together,” said Senator Ron Wyden, an Oregon Democrat. “I want the team to begin to get to dealing with these issues in a coordinated way.”
The administration has “to accept some responsibility for where this thing is now,” said Senator James Webb, a Virginia Democrat. Asked whether his confidence in Geithner has been undermined, Webb said, “I just don’t have a comment on that.”
Webb, 63, said the administration bears some blame for not knowing about or preventing the payout of bonuses at the insurer, which is now 80 percent owned by the government after receiving $173 billion in federal bailout funds.
Even Geithner defenders such as Representative Bill Pascrell of New Jersey said the secretary must accept some responsibility for the issue. Another supporter, Senator Richard Durbin of Illinois, the No. 2 Democratic leader in the chamber, said the outrage was fueled by the growing pressure on Geithner to turn around the economy.
“He took over the job, it’s his watch,” Pascrell said.
Last night, Senate Banking Committee Chairman Christopher Dodd added to the criticism, saying he weakened a provision dealing with executive pay and bonuses in last month’s stimulus legislation at the request of the Obama administration.
The Connecticut Democrat had proposed restrictions on executive compensation at companies that received money from the government’s financial-rescue fund. It was changed as the legislation was negotiated between the House and Senate.
“I did not want to make any changes to my original Senate-passed amendment but I did so at the request of administration officials,” Dodd said in an e-mailed statement.
Several lawmakers said yesterday they were concerned the outrage over AIG would undermine public support for the Obama administration’s response to the worst financial crisis since the Great Depression.
The bonus decision “may jeopardize our ability to get the majority of this Congress to support further largess, to provide funds, to prevent a recession, depression or meltdown,” Representative Paul Kanjorski, a Pennsylvania Democrat who heads the capital markets subcommittee, said as the AIG chairman, Edward Liddy, testified before his panel yesterday.