Legal Commentary

Obama To Attempt To Block AIG Bonuses

By Big Tent Democrat

UPDATE - The President said "[i]n the last six months, A.I.G. has received substantial sums from the U.S. Treasury." [He] asked Treasury Secretary . . . Geithner “to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole.” But, "White House officials said that the administration is not looking to take A.I.G. to court to stop the company from paying out the bonuses. But they said the Treasury Department would be trying to figure out what they can do to block A.I.G. from making the payments within the legal confines of A.I.G.’s contractual obligations to the executives."

More . . .

President Obama has told the Treasury secretary Timothy F. Geithner to take all legal measures to block hefty bonuses awarded to employees of AIG, the insurance company that received up to $180 billion in bailout money, a White House adviser said Monday. “The president told Secretary Geithner ... to take every legal means that he has to push back against this, to figure out who put this in the contracts and when, and to make sure this doesn’t happen again,” Austan Goolsbee, a member of Obama’s Council of Economic Advisers, told Reuters Financial Television.

“Obviously we’re not going to break the law, but there are a number of legal means that we have to push back, and the president instructed Secretary Geithner to do so,” he said.

As 80% owners of AIG, the federal government seems well positioned to instruct that AIG not pay out the bonuses. Of course, legal action seems certain to ensue. I have not seen the agreements, but I am very skeptical that the payments can be legally blocked (I promise to write about that issue later.) But obviously from a political perspective, this is a no brainer for the Obama Administration. Better to fight and lose than to not fight at all.

Speaking for me only

Full post as published by TalkLeft on March 16, 2009 (boomark / email).