Despite what Obama may think, it's not about whether Geithner or anyone else is perfect. The issue here is showing a very angry public that someone is listening and that someone in authority is moving in the right direction. Shrugging your shoulders and telling people that there are no options is all too convenient. Go ahead and let AIG and their people fight for their bonuses in court. Let them sink millions into legal battles and PR disasters for years so they can gamble on whether they have a case or not. As the Connecticut AG says, none of the bonuses would be possible of the company was bankrupt so all deals are off.
Unfortunately, this also comes back to the initial bailout of AIG and Geithner's tenure at the NY Fed. His team was in the thick of things so to hear him know act surprised about any bonus money is insincere and ignorant. Everyone deserves much more than Geithner's weak efforts, but at least a few AG's out there are moving the process.
"We heard a few explanations, but quite honestly, none of the apparent justifications hold water with me," Blumenthal said. "Because whether the payments were made in December or March, I want to know how much they were."
Blumenthal is among 20 state attorneys general who announced investigations Friday into the $165 million bonuses paid out by insurance giant AIG last week. Connecticut's top lawyer said he discovered discrepancies after issuing subpoenas to CEO Edward Liddy and 11 other executives for "original or copies of documents regarding the AIG Financial Products Corporation retention bonus plan and any related contracts or agreements."
AIG officials are citing a Connecticut law to justify their payment of the bonuses. The law says employees can sue in civil court for payments withheld that are due them and recoup double the amount of money.
But Blumenthal says there's grounds to challenge AIG's payment.
"These contracts were contingent on the company remaining in existence. This company would have ceased to exist but for the bailout with our taxpayer money," he said.
"So there are various grounds on which the contracts could be made unenforceable."
