TRNS is liveblogging the House Financial Services Committee Hearing on AIG bonuses. Updates will be added at the bottom of this post.
The Subcommittee hearing will be divided into two panels. The Committee will hear firstly from, Mr. Scott Polakoff, Acting Director for the Office of Thrift Supervision; The Honorable Joel Ario, Insurance Commissioner, Pennsylvania Insurance Department, on behalf of the National Association of Insurance Commissioners; Ms. Orice M. Williams, Director Financial Markets and Community Investment, Government Accountability Office; and Mr. Rodney Clark, Managing Director, Insurance Ratings, Standard & Poor's. On the second panel, the Committee will hear from Mr. Edward M. Liddy, Chairman and Chief Executive Officer, American International Group.
Prior to the start of the hearing some of the members of Code Pink came with protest signs on their t-shirts. One member stood on the chair until the Subcommittee chair asked for order. Medea Benjamin, founder of Code Pink wore a sign that said: AIG-JAIL" and "Give us our money back."
Chairman of the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprise, Paul Kanjorski, said in his opening statement: "We need to ask what happened, why it happened, what is happening now, and what we can do going forward to prevent similar situations. To protect the taxpayers, we must also ensure that AIG acts prudently and pays back its borrowed funds promptly."
Ranking Member Spencer Bachus (R-Al), said: "The blame game needs to be secondary."
Congressman Michale Castle (D-DE) said: "The American people need answers and to be able to trust the government now more than ever."
Congressman Michael Capauno (D-Mass.) asked the members of the first panel "where you were when AIG made their decisions."
Congressman Paul Hodes (D-DH) said: "AIG now stand for arrogance, incomptence and greed."
The greater outrage should be 4 bailouts later, no end in sight, over a congress and a president who could have orevented all of this.
Congressman David Scott (D-GA) said: "We have got to put a pause button on these bailouts."
Mr. Scott Polakoff said in his opening statement: "The rapid decline of AIG stems from liquidity problems."
Ms. Williams said in her opening statement "AIG has had mixed success" from federal government assistance. Ms. Williams said that there are no final result on the extent to which federal government assistance has helped AIG at this time.
Sub-committee Chair Paul Kanjorski made a passing remark that he had not anticipated so much attention to this hearing.
Ms. Williams said in response to a question from Congressman Scott Garrett (R-NJ), on how to act on this situation: "This is an issue that we will do what you instruct us to do."
Ms. Williams responded to Ranking Member, Spencer Bachus's (R-AL), question on the current status of AIG: "We looked at where they are and we noted some challenges...results are ongoing."
Congressman Gary Ackerman (D-NY) said: "There's a company called 'I can't believe it's not butter,' at least they have the decency to tell you that it's not butter." He added that it would have been nice if the company had admitted that what people were getting really wasn't insurance, but if that had been the case then people may not have bought it. "We need to make sure that people who think they are buying insurance, are buying insurance," Ackerman added.
The House Financial Services Committee stopped as the House was called to vote. During the recess, protestors from Code Pink began shouting at the Representatives to stay and listen to them. They demanded more money to be spent on education and for AIG to be made to give taxpayers their money back. Two members stood on chairs inside the room. All Representative's left the room to vote.
The hearing resumed with continued questioning of the first panel.
Congressman Brad Sherman (D-CA) said "It is clear that the $170 billion has gone not just pay the bonuses but has gone to take care of the counterparts...it is time that they are put into receivership."
Congressman Michael Capauno (D-Mass.) said "It's everybody's fault...everybody here allowed it to happen...it's done, we are where we are. AIG to me is just one of the many problems."
Mr. Polakoff said: "The question of whether that money ca be paid back...from an insurance perspective the answer is yes."
Mr. Clark said: "We are not certain when AIG is going to become profitable."
Congressman Stephen Lynch (D-Mass.) said: "We have received 0 in information in terms of AIG....we had sx months of silence basically...you folks are supposed to be out there helping us...why did we have to wait for six months, until this week...what's the problem with getting the answer to where the tapayers money is going?"
Mr. Polakoff was not able to form a conclusive answer to this question.
Congressman David Scott (D-GA), said: "Seems to me that somebody was asleep at the switch. This is an issue that borders on fraud and criminality."
The committee concluded its questions from the first panel at 1.22pm. A number of television cameras and photographers entered the room in anticipation for Edward Liddy's entrance. Code Pink held up their protest signs.
Sub-committee Chairman Paul Kanjorski, was extremely stern in calling the Committee room to order. Asking the Code Pink ladies to sit down. In his opening statement Chairman Kanjorski, made it clear that Mr. Liddy does not earn a CEO salary. He wanted to make this clear as he feared that Mr. Liddy and his family had received some very hostile responses as a result of the unfolding AIG scandal.
Member's of the Committee wanted to allow Mr. Liddy 'unlimited' time to give his opening testimony.
Mr. Liddy said: "We way every decision we make with one priority in mind...will we make this money back to pay back to the government."
With regard to the large bonuses paid out by AIG, Liddy said: "It was distasteful to have to make these payments."
"We have heard the American people loudly and clearly these last few days...We have asked those who received bonuses in excess of $100,000 to return at least half of those payments...some have offered to pay back 100 per cent of those payments," Liddy added.
Mr. Liddy said: "Everything we do is done in partnership with the Federal Reserve."
Chairman Paul Kanjorski asked: "Do you realize that the actions you took at AIG...may jeopardize the ability of this Congress to pass legislation to send further large checks to assist the economic depression/recession?"
Mr. Liddy responded: "I am."
Congressman ScottvGarrett (R-NJ), asked Mr. Liddy about the AIG exit strategy.
Mr. Liddy said: "The exit strategy i think is a solid one. It has been in place for a while now."
Proceedings were stopped momentarily during Mr. Liddy's questioning for Police to remove signs from Code Pink protestors. The ladies peacefully surrendered their signs to the Police,
Congressman Barney Frank (D-Mass.) joked that he was glad the Chairman had not also asked them to remove their t-shirts, which were also covered in protest slogans.
Congressman Frank asked that Mr. Liddy submit the names of those who received bonuses without restriction, to the Committee.
Mr. Liddy responded that his request was "legitimate" but was hesitant as he feared for the safety for those who received the bonuses and for the safety of their families.
Congressman Frank said he understood the fear of threats, calling such threats "despicable", but would "keep the request for those names on the table."
Speaking about AIG's debt, Mr. Liddy said: "It's a range of $80 billion, that's what we actually owe...we owe $40 billion from TARP funding...plus $50 billion that the Federal Reserve has invested."
Congressman Gary Ackerman (D-NY), thanked Mr. Liddy for performing his role to the best of ability. He apologized on the majority of decent American's for the threats he had received. He said: "I want to try and help you...pay the $165 million back...it is not worth the aggravation and angst that you have suffered."
Congressman Michael Castle (R-DE), asked Mr. Liddy about his correspondence with Secretary of the Treasury Timothy Geithner.
Mr. Liddy said:"I had a meeting with Secretary Geithner and he informed me that he had only been made aware a week prior to that."
Congressman Gary Ackerman (D-NY), asked whether Mr. Liddy would submit the names of those who received the bonuses to the Attorney General. Mr. Liddy was very evasive in his response."
Mr. Liddy said: "I want to be sure that if I turn over the names, there will not be a list of names, addressees and photos attached to them." He added that he would "follow the advice fo his General Counsel and do the right thing."
Congressman Brad Sherman (D-CA), asked Mr Liddy to submit to the Committee a chart that would show the Committee in the future, bonuses, the cost of the bonuses and who would receive these bonuses.
Congressman Michael Capauno (D-Mass.) asked: "When you were doing these bonuses, did you expect it to touch a nerve witht the american people?"
Mr. Liddy said: "Yes. I did...but not a the level it has."
Congressman Michael Capauno (D-Mass.) then asked Mr. Liddy whether ir not he felt that those who received the bonuses were the only people who were capable of doing their jobs.
Mr. Liddy responded: "No."
Congressman Michael Capauno (D-Mass.) suggested that Mr. Liddy could have fired those individuals and hired some of the capable unemployed people out there for less money.
Mr. Liddy disagreed with this point. He said that they had a special expertise that AIG could not afford to lose. In his response he repeated the phrase "risk assessment" several times when weighing up the pros and cons to paying out the bonuses.
Congresswoman Melissa Bean (D-Ill) asked Mr. Liddy about AIG's current financial situation and whether he felt they would be asking for more financial assistance. Mr. Liddy responded: "I believe we are adequately capitalized...very much a question of what happens with capital markets around the world."
Mr Liddy said: "It is not a failed company, it is a failing company unless we plan to do something about it."
Congressman Stephen Lynch (D-Mass.), said: "You have basically immunized yourself, protected yourself from one of the most stupid decisions from AIG," when referring to a document outlining AIG's bonus policy written in 2008.
Mr. Liddy replied: "I take offense at what you just said." To which Congressman Lynch responded: "Offense was intended." Congressman Lynch became increasingly frustrated with Mr. Liddy's responses to his questions, raising his voice as he spoke.
Mr. Liddy said: "Its a fact of life. AIG owes those counterparts that money".
The hearing went into recess for one hour as the House was called to vote.
Liveblog: House Financial Services hearing on AIG bonuses
TRNS is liveblogging the House Financial Services Committee Hearing on AIG bonuses. Updates will be added at the bottom of this post.
The Subcommittee hearing will be divided into two panels. The Committee will hear firstly from, Mr. Scott Polakoff, Acting Director for the Office of Thrift Supervision; The Honorable Joel Ario, Insurance Commissioner, Pennsylvania Insurance Department, on behalf of the National Association of Insurance Commissioners; Ms. Orice M. Williams, Director Financial Markets and Community Investment, Government Accountability Office; and Mr. Rodney Clark, Managing Director, Insurance Ratings, Standard & Poor's.
On the second panel, the Committee will hear from Mr. Edward M. Liddy, Chairman and Chief Executive Officer, American International Group.
Prior to the start of the hearing some of the members of Code Pink came with protest signs on their t-shirts. One member stood on the chair until the Subcommittee chair asked for order. Medea Benjamin, founder of Code Pink wore a sign that said: AIG-JAIL" and "Give us our money back."
Chairman of the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprise, Paul Kanjorski, said in his opening statement: "We need to ask what happened, why it happened, what is happening now, and what we can do going forward to prevent similar situations. To protect the taxpayers, we must also ensure that AIG acts prudently and pays back its borrowed funds promptly."
Ranking Member Spencer Bachus (R-Al), said: "The blame game needs to be secondary."
Congressman Michale Castle (D-DE) said: "The American people need answers and to be able to trust the government now more than ever."
Congressman Michael Capauno (D-Mass.) asked the members of the first panel "where you were when AIG made their decisions."
Congressman Paul Hodes (D-DH) said: "AIG now stand for arrogance, incomptence and greed."
The greater outrage should be 4 bailouts later, no end in sight, over a congress and a president who could have orevented all of this.
Congressman David Scott (D-GA) said: "We have got to put a pause button on these bailouts."
Mr. Scott Polakoff said in his opening statement: "The rapid decline of AIG stems from liquidity problems."
Ms. Williams said in her opening statement "AIG has had mixed success" from federal government assistance. Ms. Williams said that there are no final result on the extent to which federal government assistance has helped AIG at this time.
Sub-committee Chair Paul Kanjorski made a passing remark that he had not anticipated so much attention to this hearing.
Ms. Williams said in response to a question from Congressman Scott Garrett (R-NJ), on how to act on this situation: "This is an issue that we will do what you instruct us to do."
Ms. Williams responded to Ranking Member, Spencer Bachus's (R-AL), question on the current status of AIG: "We looked at where they are and we noted some challenges...results are ongoing."
Congressman Gary Ackerman (D-NY) said: "There's a company called 'I can't believe it's not butter,' at least they have the decency to tell you that it's not butter." He added that it would have been nice if the company had admitted that what people were getting really wasn't insurance, but if that had been the case then people may not have bought it. "We need to make sure that people who think they are buying insurance, are buying insurance," Ackerman added.
The House Financial Services Committee stopped as the House was called to vote. During the recess, protestors from Code Pink began shouting at the Representatives to stay and listen to them. They demanded more money to be spent on education and for AIG to be made to give taxpayers their money back. Two members stood on chairs inside the room. All Representative's left the room to vote.
The hearing resumed with continued questioning of the first panel.
Congressman Brad Sherman (D-CA) said "It is clear that the $170 billion has gone not just pay the bonuses but has gone to take care of the counterparts...it is time that they are put into receivership."
Congressman Michael Capauno (D-Mass.) said "It's everybody's fault...everybody here allowed it to happen...it's done, we are where we are. AIG to me is just one of the many problems."
Mr. Polakoff said: "The question of whether that money ca be paid back...from an insurance perspective the answer is yes."
Mr. Clark said: "We are not certain when AIG is going to become profitable."
Congressman Stephen Lynch (D-Mass.) said: "We have received 0 in information in terms of AIG....we had sx months of silence basically...you folks are supposed to be out there helping us...why did we have to wait for six months, until this week...what's the problem with getting the answer to where the tapayers money is going?"
Mr. Polakoff was not able to form a conclusive answer to this question.
Congressman David Scott (D-GA), said: "Seems to me that somebody was asleep at the switch. This is an issue that borders on fraud and criminality."
The committee concluded its questions from the first panel at 1.22pm. A number of television cameras and photographers entered the room in anticipation for Edward Liddy's entrance. Code Pink held up their protest signs.
Sub-committee Chairman Paul Kanjorski, was extremely stern in calling the Committee room to order. Asking the Code Pink ladies to sit down. In his opening statement Chairman Kanjorski, made it clear that Mr. Liddy does not earn a CEO salary. He wanted to make this clear as he feared that Mr. Liddy and his family had received some very hostile responses as a result of the unfolding AIG scandal.
Member's of the Committee wanted to allow Mr. Liddy 'unlimited' time to give his opening testimony.
Mr. Liddy said: "We way every decision we make with one priority in mind...will we make this money back to pay back to the government."
With regard to the large bonuses paid out by AIG, Liddy said: "It was distasteful to have to make these payments."
"We have heard the American people loudly and clearly these last few days...We have asked those who received bonuses in excess of $100,000 to return at least half of those payments...some have offered to pay back 100 per cent of those payments," Liddy added.
Mr. Liddy said: "Everything we do is done in partnership with the Federal Reserve."
Chairman Paul Kanjorski asked: "Do you realize that the actions you took at AIG...may jeopardize the ability of this Congress to pass legislation to send further large checks to assist the economic depression/recession?"
Mr. Liddy responded: "I am."
Congressman ScottvGarrett (R-NJ), asked Mr. Liddy about the AIG exit strategy.
Mr. Liddy said: "The exit strategy i think is a solid one. It has been in place for a while now."
Proceedings were stopped momentarily during Mr. Liddy's questioning for Police to remove signs from Code Pink protestors. The ladies peacefully surrendered their signs to the Police,
Congressman Barney Frank (D-Mass.) joked that he was glad the Chairman had not also asked them to remove their t-shirts, which were also covered in protest slogans.
Congressman Frank asked that Mr. Liddy submit the names of those who received bonuses without restriction, to the Committee.
Mr. Liddy responded that his request was "legitimate" but was hesitant as he feared for the safety for those who received the bonuses and for the safety of their families.
Congressman Frank said he understood the fear of threats, calling such threats "despicable", but would "keep the request for those names on the table."
Speaking about AIG's debt, Mr. Liddy said: "It's a range of $80 billion, that's what we actually owe...we owe $40 billion from TARP funding...plus $50 billion that the Federal Reserve has invested."
Congressman Gary Ackerman (D-NY), thanked Mr. Liddy for performing his role to the best of ability. He apologized on the majority of decent American's for the threats he had received. He said: "I want to try and help you...pay the $165 million back...it is not worth the aggravation and angst that you have suffered."
Congressman Michael Castle (R-DE), asked Mr. Liddy about his correspondence with Secretary of the Treasury Timothy Geithner.
Mr. Liddy said:"I had a meeting with Secretary Geithner and he informed me that he had only been made aware a week prior to that."
Congressman Gary Ackerman (D-NY), asked whether Mr. Liddy would submit the names of those who received the bonuses to the Attorney General. Mr. Liddy was very evasive in his response."
Mr. Liddy said: "I want to be sure that if I turn over the names, there will not be a list of names, addressees and photos attached to them." He added that he would "follow the advice fo his General Counsel and do the right thing."
Congressman Brad Sherman (D-CA), asked Mr Liddy to submit to the Committee a chart that would show the Committee in the future, bonuses, the cost of the bonuses and who would receive these bonuses.
Congressman Michael Capauno (D-Mass.) asked: "When you were doing these bonuses, did you expect it to touch a nerve witht the american people?"
Mr. Liddy said: "Yes. I did...but not a the level it has."
Congressman Michael Capauno (D-Mass.) then asked Mr. Liddy whether ir not he felt that those who received the bonuses were the only people who were capable of doing their jobs.
Mr. Liddy responded: "No."
Congressman Michael Capauno (D-Mass.) suggested that Mr. Liddy could have fired those individuals and hired some of the capable unemployed people out there for less money.
Mr. Liddy disagreed with this point. He said that they had a special expertise that AIG could not afford to lose. In his response he repeated the phrase "risk assessment" several times when weighing up the pros and cons to paying out the bonuses.
Congresswoman Melissa Bean (D-Ill) asked Mr. Liddy about AIG's current financial situation and whether he felt they would be asking for more financial assistance. Mr. Liddy responded: "I believe we are adequately capitalized...very much a question of what happens with capital markets around the world."
Mr Liddy said: "It is not a failed company, it is a failing company unless we plan to do something about it."
Congressman Stephen Lynch (D-Mass.), said: "You have basically immunized yourself, protected yourself from one of the most stupid decisions from AIG," when referring to a document outlining AIG's bonus policy written in 2008.
Mr. Liddy replied: "I take offense at what you just said." To which Congressman Lynch responded: "Offense was intended." Congressman Lynch became increasingly frustrated with Mr. Liddy's responses to his questions, raising his voice as he spoke.
Mr. Liddy said: "Its a fact of life. AIG owes those counterparts that money".
The hearing went into recess for one hour as the House was called to vote.