Thursday, March 19, 2009
Rep. Stephen Lynch disgraces himself -- Watch the whole thing
I'm as angry as anyone about the whole A.I.G. situation, as I said in this post. I also believe that right the way out with no further nonsense is to nationalize the company, split it in two, and place the toxic half under federal receivership.
That being said, at the circus calling itself a Congressional hearing yesterday, both Democratic and Republican politicians put on a disturbing display of feigned outrage and phony oversight.
We all know now that the A.I.G. bonuses have been openly on the table since last year. Congress and the current leaders of Congress, along with the Bush Administration, had numerous opportunities since last September to stop these bonuses or any other bonuses at bailed out companies. In fact, the $789-billion stimulus bill rushed through Congress and signed into law by President Obama in February at one point included language that would have barred the A.I.G. payouts, but that language was taken out with the full knowledge of Senate Banking Committee Chairman Christopher Dodd. We know that Treasury Secretary Geithner had ample opportunity to block the bonuses in his current job and in his former position as head of the New York Federal Reserve bank. And we know that the President himself knew about the bonuses several days before they went out, but he did not express his own "outrage" until after he saw the public outcry.
So there is plenty of blame to go around. You'd never know it from the clownish conduct of the House Financial Services Committee under Rep. Barney Frank's chairmanship. Members of both parties eagerly joined in whipping A.I.G. new CEO Edward Liddy. Liddy is not entirely blameless. In my opinion, he ought to have been more aggressive in fixing responsibility for the company's crack up down the line and ought to have found a way to persuade or force A.I.G. executives at least to defer these bonuses until the mess at the company could be cleared up.
Still, Liddy was asked by the government to take on the huge task of cleaning up the mess at A.I.G. last September. He had nothing whatsoever to do with the destruction of A.I.G.. He was not at A.I.G. when the company entered into the contracts bestowing the "retention bonuses." He came out of retirement and took the job for a dollar a year and has been working 24/7 for the past six months under the guidance of both the Treasury and the Federal Reserve to wind down A.I.G.'s "casino" business and put A.I.G. back on a sound footing.
So the guy deserves civil treatment -- tough questioning, yes, but abuse, no. The aptly named Rep. Stephen Lynch of Massachusetts outdid everyone in gratuitous, personal pillorying Liddy in the exchange shown in the video above. His conduct was that of a shameless bully.
Lynch's constituents ought to be asking him, as a key member of the Congressional committee that has responsibility for the entire process of bailing out financial services companies, where was he for the past six months when the $170 billion was pouring out the door to A.I.G. in three tranches? Did he even read the stimulus bill so he would know whether it barred such bonuses or not? Did he trouble himself to exercise any oversight before realizing that there was a big public stink and he needed to cober himself?
Lynch owes Liddy an apology. I'm not holding my breath waiting for him to offer one.
What do you think? Post a comment.
Posted by J. E. Burke at 2:21 PM