Chairman Paul Kanjorski presided over the congressional hearing involving state representatives, the NAIC, the Treasury Department, the Office of Thrift Supervision and Standard & Poor’s.
“We meet today to scrutinize American International Group,” Kanjorski began. He continued, explaining that the reason for the current and future meetings was to discern several things – namely how AIG got to where it is now, how they are using (or misusing) taxpayer bailout funds and how and when the company will pay back its bailout money, plus interest.
Time was then given to the always-outspoken Representative Barney Frank from Massachusetts, who undoubtedly received nods of satisfaction from the viewing audience.
“Something is seriously out of whack and AIG needs to fix it now,” Frank stated. “Many Americans have made personal sacrifices to make it in this difficult time – AIG should do the same.”
Frank then read from the AIG contracts in question, stating the specifics of the bonuses, which said if the company has a net loss for the year, the employees still receive their bonuses.
“This is a problem with compensation structure,” Frank lambasted. “They give themselves contracts that effectively insulate them from losses. We should exercise our rights as owners of this company and bring about lawsuits.” Referring to the breaking of the contracts in question, he made vocal what most Americans are thinking right now: “the magnitude of the losses is so great that we are justified in rescinding the bonuses.”
Representative Spencer Bachus from Alabama blamed Washington, the regulators, and Congress for failing to do their jobs.
“However, the blame game needs to be secondary,” he stated. “Recouping the taxpayer’s money is first and foremost. But will AIG ever return to profitability and will they ever be able to return the money.”
A valid question indeed.
Chairman Kanjorski then turned the questioning to the panel of three individuals representing the NAIC, Standard and Poor’s, the OTS and the Treasury Department. From the insurance regulator perspective- the head of the NAIC claimed that AIG has become the poster child for systemic risk. He then revealed the obvious – that there are “threats on horizon in terms of reputational risk in regards to the insurance division of AIG.”
After two hours of questions and statements, the meeting broke with heckling from some in attendance who held signs reading “honest taxpayer fund.”
You can watch the full video of the hearing here. Another hearing is set for March 24, when Congress will hear from Treasury Secretary Tim Geithner, among others.
