Elijah Cummings Knew About $1 Billion in AIG Bonuses for "Months" -- Why Didn't Timothy Geithner?

Cummings' statements, if true, mean that many journalists have been fed a bill of goods by their "anonymous" administration sources.
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Elijah Cummings shot huge holes through the stories of both Timothy Geithner and Edward Liddy yesterday during the AIG hearing on Capitol Hill.

Cummings isn't even on the House Financial Services Committee, he's on House Oversight, but he made a special request to question Liddy. Most of the attention went to subcommittee chair Paul Kanjorski, who dropped the bomb about having known of the AIG bonuses at least 4-6 weeks ago. During his testimony, Liddy confirmed that Ben Bernanke both knew about the bonuses and had approved them.

But Cummings' questions, which came late in the day, should have grabbed the headlines. In his opening question to Liddy, he said:

The media has been focused on the $165 million installment of the $450 million retention program for AIG Financial Products Division. However, for months, you and I have been going back and forth overall about the one billion dollars retention program that covers thousands of employees throughout AIG.

As Marcy Wheeler points ot this morning, Cummings then destroys Liddy's story that he was only given the "distasteful" task of paying out bonuses approved by others that he would never have allowed. From Liddy's Dec. 5 letter to Cummings:

On September 18, 2008 AIG's compensation committee of the Board of Directors approved retention payments for 168 employees.

Liddy was very much in charge of AIG on September 18, when those retention payments were approved.

Cummings says that he met with Liddy on January 15, and at that time Liddy admitted that under his tenure, he had expanded the retention bonus program to cover 2100 employees. Cummings asked how many retention bonuses Liddy had approved, and Liddy estimated that he approved 4500 to 4700 bonuses. However, he says that number didn't include bonuses agreed to by managers of other divisions, so there were evidently more.

I was at the hearings most of the day yesterday, and I believe Cummings was the first one to ask how much money AIG had paid in bonuses in 2008 and how much was scheduled to be paid out in 2009. Liddy said he didn't know.

Let's underscore that -- Edward Liddy comes to a subcommittee hearing to answer questions about AIG bonuses, is sworn in and testifying under oath, he answers questions by every single member of the subcommittee for hours, nobody on the subcommittee asks him how much money we're talking about, and he's not prepared to answer the question when someone finally does.

The questioning of Liddy by the subcommittee yesterday was thoroughly uninformed and seemed designed to ask no serious questions. They seemed to be more interested in faux outrage, or giving Liddy a foot massage for being a great patriot working in the service of this country.

But the bottom line is -- Cummings' statements, if true, mean that many journalists have been fed a bill of goods by their "anonymous" administration sources:

Jeff Mason of Reuters says that Geithner found out about the bonuses on March 10 "according to an administration official." Yesterday Kanjorski said, "I'm sick and tired of hearing the administration and the Secretary of the Treasury say "we just found out about it." That's not true." So will Mason do the right thing and get to the bottom of it, and expose the anonymous source who lied to him if it turns out not to be true?

Massimo Calabresi now has a "scoop" in Time Magazine. He says that there's now a rift between the Treasury and the Fed, and the Fed is letting him have the goods -- namely, that the Treasury knew about the bonuses on February 28, but nobody told poor hapless Geithner.

How convenient. Geithner was lobbying heavily at the time of the stimulus bill conference for the insertion of language that made sure the AIG bonuses got paid out in full, on February 11. Which means that if he was doing so with knowledge of the existence of the bonus contracts, he was trying to make sure they got paid. The "outrage" that caused him to reduce the total by $4.8 million before he approved them was a less than Oscar-worthy performance.

But voila! Now we hear that Geithner KNEW NOTHING and Treasury was clueless until February 28, which puts them outside the danger zone. No mention of the fact that Elijah Cummings says he knew about the bonuses for "months."

David Cho and Michael D. Shear of the Washington Post don't mention it either, when they print the official administration-dictated pushback to the Fed story:

Treasury Secretary Timothy F. Geithner, a central figure in the decision to bail out AIG last fall as president of the Federal Reserve Bank of New York, said in an interview yesterday that he had not been aware of the size of the bonuses and the timing of the payments.

"I was stunned when I learned how bad this was on Tuesday [March 10]," Geithner said. "I shouldn't have been in that position, but it's my responsibility and I accept that."

It's all just crap, of course. Elijah Cummings knew the details, Paul Kanjorski knew the details, Ben Bernanke knew (and approved) the details. Geithner either doesn't know what is going on right under his nose and is thoroughly unequal to the task of overseeing the bank bailout, or he's lying through his teeth.

Cummings' statements call into serious question the assertions being made by Edward Liddy, Timothy Geithner and sources at the Fed this morning. You could fire a cannon through the holes in the stories of Calabresi, Cho and Shear. If their job is just to mindlessly scribble whatever anyone tells them in order to preserve "access," no matter how stupid and nonsensical, they've done their job.

But many people reading these stories assume that the reporters are actually knowledgeable about what they're writing about, and have taken time to do a thorough job of research and are asking important questions. That most certainly didn't happen.

And as a side note -- when Cho and Shear had the chance to interview Geithner, they apparently didn't think it important to ask him about the deal he approved to pay out $1 billion in AIG bonuses later this year, in July and September, to employees of a company that lost $100 billion last year. Now that the President has said he is "outraged" by these bonuses, does Geithner intend to do anything about it?

If you're doing real reporting and not just taking dictation, it's a question you might think to ask.

Jane Hamsher blogs at firedoglake.com

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