Guests: Byron Dorgan, Paul Kanjorski, Lars Larson, John Feehery, Nia
Malika Henderson, Steny Hoyer, Patrick Leahy
ED SCHULTZ, HOST (voice-over): Tonight, the president is angry.
BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: I don‘t want to quell anger. I think people are right to be angry. I‘m angry.
SCHULTZ: On Capitol Hill, it‘s March Madness. Everybody is hot under the collar.
UNIDENTIFIED MALE: That‘s a complete violation of trust and the people who invested in your company. This should not have happened.
SCHULTZ: AIG‘s CEO is finally on the hot seat talking about your money.
EDWARD LIDDY, CEO, AIG: The situation at AIG that has sparked the nation‘s outrage...
SCHULTZ: But can Congress do anything about those outrageous bonuses? We‘ll ask House Majority Leader Steny Hoyer and the chairman of today‘s hearing, Congressman Paul Kanjorski.
And later, the chairman of the Senate Judiciary Committee, Pat Leahy, talks about his best friend, Dick Cheney—yeah, right.
And finally, I‘ll tell you who‘s going to win the NCAA tournament. It‘s going to be a Cinderella story.
It‘s all coming up tonight on 1600 PENNSYLVANIA AVENUE.
OBAMA: And that‘s the task that lies before us.
SCHULTZ: Day 58 of the Obama administration. And folks, it was a rough day at the office.
I‘m Ed Schultz, in for David Shuster tonight.
The Congress now wrestles with their potential and unclear powers on reeling in what Americans consider outrageous fraud office operations with your tax dollars. AIG, under the microscope in the midst of this generation‘s worst economic crisis, now I think stands to be the benchmark story of this potential recovery.
The question is, can it be done? Who‘s at fault? And how are we going to get this thing fixed?
(BEGIN VIDEO CLIP)
OBAMA: Nobody here drafted those contracts. Nobody here was responsible for supervising AIG and allowing themselves to put the economy at risk by some of the outrageous behavior that they were engaged in.
We are responsible, though. The buck stops with me.
(END VIDEO CLIP)
SCHULTZ: The president went on today to defend his treasury secretary and his entire economic team. Now the search for solutions is on, and the Congress, of course, started with what I think is pretty much a dog and pony show. It‘s almost as if, as Americans, haven‘t we heard this before, “We are just absolutely outraged by all of this”?
Well, if you watched last week, you know I‘m outraged with my health care bill, but I guess I can‘t do the same story every time I come on this program.
Steny Hoyer, who is the House majority leader, is going to be joining us in just a few moments, but Nia-Malika Henderson joins us off the top tonight, here on 1600 PENNSYLVANIA AVENUE.
Did I actually hear Mr. Liddy today show some reluctance to giving this money back? Did I hear that?
NIA-MALIKA HENDERSON, POLITICO: I think there was a little reluctance on his part.
SCHULTZ: Are they watching the news?
HENDERSON: Yes. I mean, there‘s obviously tons of outrage here on Main Street about this, and you saw, you know, the Congress folks kind of channeling that today. But, I mean, yes, I mean, those guys are in trouble, and it was certainly a firing squad up there today.
SCHULTZ: The Politico has been on this story. You‘re at The Politico, Nia. Now, what‘s the play here?
SCHULTZ: Who‘s at fault here? Are we ever going to find out who‘s at fault? I don‘t feel like I‘ve found out who was at fault today by watching these hearings.
HENDERSON: Yes. I mean, that‘s the thing.
I mean, we had a story today that basically said it‘s kind of a circular firing squad. And, I mean, you‘ve seen Republicans all day trying to score some political points out of this and really kind of blame the Democrats. And of course, Obama pushed back today and said, you know, on the one hand, we didn‘t necessarily create this mess, but the buck stops with him.
SCHULTZ: All right. Here‘s just some comments from the hearing today in case you missed it, folks. It‘s amazing, some of this stuff.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Am I to understand you‘re saying that Chairman Bernanke or his designated person at the Federal Reserve was informed that you were going to make these payments and acquiesced in that decision?
LIDDY: Yes. Everything we do, we do in partnership with the Federal Reserve.
UNIDENTIFIED MALE: When I was in the private sector, two things had to happen to qualify for a bonus. You had to perform exceedingly well, the company had to perform exceedingly well.
LIDDY: No performance bonuses at FP. Zero. It‘s different issue than the retention bonuses.
REP. BARNEY FRANK (D), CHAIRMAN: So the only bonuses that were paid recently were the retention bonuses?
FRANK: There were no other bonuses paid?
LIDDY: Not at AIG FP, no.
UNIDENTIFIED MALE: You have received or have access to $197.3 billion of U.S. taxpayer money -- $165 million adds up, to this old math teacher, as less than .1 of 1 percent.
Give that back. Cut your losses.
LIDDY: What I would like to do, Sir, is see how much leadership comes from the AIG FP people in terms of returning those bonuses. My fear is the damage is done. That we will get the bulk of that money back, they will return it, but they will return it with their resignations.
UNIDENTIFIED MALE: I really appreciate what you have done. Nonetheless, it would be nice if we had a couple more people working for AIG at top-level salaries that felt the same way or anywhere near the same way. And for those who don‘t, the truth is, as one taxpayer, I don‘t want them working for me. I just as soon you get rid of them.
(END VIDEO CLIP)
SCHULTZ: Well, all you have to do is ask Americans if you‘re willing to apply for a job at AIG. But you‘re not going to get a bonus. Do you know how long the line would be? As long as your arm.
Now, what does leadership think about all of this?
Joining me now is House Majority Leader Steny Hoyer.
Steny, my friend, we‘re not talking about fishing here. OK? This is some serious business.
Do you think we made any progress today with these hearings?
REP. STENY HOYER (D), MAJORITY LEADER: Well, I don‘t whether we made progress at these hearings. Certainly, Liddy said he felt that he was embarrassed. He obviously was brought in after the fact, felt he was obliged by these contracts.
But the last—and I‘m not watching the television monitor, but the last person I heard said give it back. I can‘t believe that these guys or gals who got these bonuses from AIG, a failed company that had been very successful but was run into the ground by a lot of people, would take these bonuses given the circumstances that exist. And they ought to realize the American public are rightfully outraged, that Congress is outraged.
We‘re going to take action so that this is turned around. But the best interest of the country and, very frankly, the best interest of AIG and every one of these people, is to give it back. To say, look, under the circumstance, we‘re in trouble. You‘ve helped us. We‘re not going to take money that you helped us with to get fat bonuses.
It‘s amazing that they aren‘t doing that and aren‘t doing it promptly.
SCHULTZ: Congressman Steny Hoyer, who is the House majority leader, with us here on 1600 PENNSYLVANIA AVENUE tonight.
Now, Congressman, isn‘t there a real serious legal question here as to what Congress can actually do about forcing these employees to give this money back to the Treasury? And how far and how much are you going to be pushing this?
HOYER: I think there is a legal question. We need to review that legal question.
We‘re very supportive of every and any action taken by the administration to get this money back, to reverse this policy. We‘re also going to pass legislation tomorrow on suspension, which I think will be supported overwhelmingly, which will have a very severe tax consequence on these bonuses. But we certainly need to look at the legal ramifications here.
But the real ramifications are the outrage that the American people rightfully feel that, they stepped up to the plate, they‘re trying to save a company that, if it goes down, will have very, very severe, adverse impact on the economy as a whole and on Americans as a whole, as it already has. So that‘s why we say the first option here is give this money back.
SCHULTZ: OK. Well, there was a reluctance today by Mr. Liddy. Apparently, he hadn‘t been watching the news too much and he doesn‘t get this outrage that everybody‘s talking about. But it‘s an issue of process, it‘s an issue of legality, but it is also a disconnect, it seems, from AIG to connect with where this country stands on this issue. And it makes it a bigger problem, I think, for the president.
How do you think the president handled this today?
HOYER: Well, I think the president obviously says pretty forcefully, or
I didn‘t see his conference today, but says pretty forcefully that this was wrong, that the people who did it were wrong in doing so, and that he‘s going to take every action he can to reverse this decision. I think that was right. Now, I didn‘t see his comments today, Ed, so I can‘t comment specifically on that.
SCHULTZ: Well, he took responsibility for it. He said the buck stops on his desk...
HOYER: And I think that‘s right.
SCHULTZ: ... which I thought was a real test of leadership, and he showed it.
HOYER: Yes. I think that‘s right, and I think he said he‘s going to take every action he could possibly—has available to him to reverse this.
And I think, yes, the buck does stop on his desk. But very frankly, this money that was given to AIG was largely given under the previous administration without the restrictions that we built into the second TARP bill.
It‘s unfortunate that they were not imposed at the beginning. So people clearly knew the rules. You‘re not going to take our money and use it to inflate salaries, give huge severance bonuses or, in this case, huge retention benefits.
SCHULTZ: And finally, Mr. Leader, Steny Hoyer, the congressional leader in the House, you‘re in charge of the agenda, making sure that this thing that the president wants to do, change this country—and, you know, Steny, this is raw meat to the Republicans. How much is this going to potentially slow down the agenda?
HOYER: Well, I think it‘s not going to slow down the agenda. We‘re going to move on this. As I said, we‘re going to have a bill on the floor tomorrow which will have a very substantial tax consequence, essentially taxing those people who keep these bonuses at this company or other companies that have received federal taxpayer dollars to try to help them get through this very, very bad patch, caused in large part by their irresponsibility and lack of accountability.
So we‘re going to move forcefully on this front, but we‘re also going to move forward on making sure the economy recovers and making sure that we invest in the future and deal with the health care and energy independence and education issues that the president‘s made a priority.
SCHULTZ: Steny, great to have you on with us. I appreciate your time tonight here on 1600 PENNSYLVANIA AVENUE, my friend.
HOYER: Always good to be with you, Ed.
SCHULTZ: You bet.
House Majority Leader Steny Hoyer.
OK. Up next on 1600, so, is this damaging, this whole ordeal, to the Obama administration? Is this a political opening for the Republicans to make sure that the president will be hurtin‘ for certain?
(BEGIN VIDEO CLIP)
REP. ERIC CANTOR ®, MINORITY WHIP: What‘s going on in this administration? It seems like they‘re an administration in disarray, and that‘s why we‘ve always had a real concern.
(END VIDEO CLIP)
SCHULTZ: Keep dreaming, boys over there on the right. I think the president has got game on this issue.
We‘ll ask Senator Pat Leahy, chairman of the Senate Judiciary Committee, is this a big boulder in the road for President Obama?
SCHULTZ: Welcome back to 1600.
As Americans watch this ridiculous show over AIG on Capitol Hill, keep in mind, where there is adversity, there is opportunity.
Folks, I think this story plays right into the president‘s wheelhouse. This president seems to have an innate ability to turn a negative into a positive. This is a real test of Obama‘s management skills and, you know, he‘s the guy on the campaign trail that everybody said he didn‘t have any experience. Well, where do you go get prepared for a job like this?
I‘ll tell you, I give the president an absolute A for his performance today. And he said it today, “The buck stops here on my desk.” Now how refreshing is that?
You know, he could have placed the blame on somebody else. He could have kicked Geithner under the bus, he could have benched Geithner, thrown him around. Said, no, I‘m not going to do that. It was a fantastic day for President Obama.
So how is it going to play with his supporters?
Let‘s ask long-time supporter and friend, Senator Patrick Leahy, chairman of the Senate Judiciary Committee.
Senator, this has gotten to be quite a sideshow for the American people, to watch all of this. There was actually an executive that came up on Capitol Hill today that was reluctant to give these bonuses back.
What‘s your take on this? But most of all, is this potentially damaging to the president?
SEN. PATRICK LEAHY (D), CHAIRMAN, JUDICIARY COMMITTEE: Well, I think it‘s damaging certainly to the economy, but not to the president. He‘s taken responsibility even for things that happened during the last administration, before he was president.
In a way, it‘s refreshing to have somebody take a Harry Truman-type attitude, the buck stops here, I‘ll take responsibility for whatever happens. A lot of us, both Republicans and Democrats, were frustrated in the last administration. Nobody was to blame for anything.
SCHULTZ: Senator, what about...
LEAHY: Go ahead.
SCHULTZ: Well, what about these contracts? From a legal standpoint, I mean, we have seen contracts in this country renegotiated all the time. Labor does it all the time. Why can‘t these contracts—do they have special fine print that the American people don‘t know about it?
LEAHY: You know, if I had been there, if I had been in charge, I wouldn‘t have paid the bonuses at all. I would have said, look, you don‘t like that, sue me. I‘ll be happy to go to court.
You can go in there and say we need this performance bonus, even though we put the company in the tank, even though the American taxpayer is on the hook. Oh, by the way, we want these 12 taxpayers sitting here on the jury to give us millions of dollars for our mistakes.
How far do you think they would get? I mean, I think I would tell them, fine, you want the bonuses? Sue me for it. I don‘t think there‘s a jury—I would rather be—I‘ll represent the United States on something like that and do it pro bono. You can win that case.
They‘re not going to get those bonuses.
SCHULTZ: Senator, late this afternoon, the New York Supreme Court ruled that this is not trade secrets, that the names of these employees that got these bonuses could be made public.
Considering the public outcry about this, how do you feel about this?
Is this dangerous territory?
LEAHY: No, I think Andrew Cuomo is right to go and seek those names and to make it public. The fact is the bonuses should not be paid, and the fact is these people can say they got all kinds of contracts, but the contracts were for performance, not for causing hundreds of billions of dollars worth of losses.
And I think if they want it, then litigate for it. That‘s what the courts are for.
SCHULTZ: Now, that, of course, was dealing with Merrill Lynch.
Now, Senator Ron Wyden and Olympia Snow offered amendments to limit bonuses in the stimulus package. It got killed in committee.
How does this happen? Is Congress aware of where the people are on this? And you‘ve been a real hawk, Senator, on full disclosure. What about this? How do you play this?
LEAHY: Well, I‘m not sure what happened in the committee. I‘m not on that committee. But of course, if the American taxpayers are going to pay the bill, we ought to be able to set the rules.
We‘re talking about millions of dollars to people who screwed up. We set by law, the president of the United States can‘t be paid over $400,000 a year. That‘s chump change to these people. And if we‘re going to own it, taxpayers are going to own it, then we ought to be able to set the rules of how much people get paid.
SCHULTZ: Senator, you also have been at odds with the former vice president of the United States when it comes to information. This is what the former vice president had to say on a weekend show. Here it is.
(BEGIN VIDEO CLIP)
RICHARD CHENEY, FMR. VICE PRESIDENT OF THE UNITED STATES: I think those programs were absolutely essential to the success we enjoyed of being able to collect the intelligence that led us to defeat all further attempts to launch attack against the United States since 9/11. I think that‘s a great success story. It was done legally, it was done in accordance with our constitutional practices and principles.
(END VIDEO CLIP)
SCHULTZ: Senator, only you can respond to that. I mean, that‘s Dick Cheney‘s world right there. That‘s his made up Constitution.
Your thoughts on it?
LEAHY: Well, you know, Dick Cheney is out there trying to write history the way he wants with nobody to speak out against him. If he really thinks that this was following the Constitution, following the law, and really helped us, he ought to support my call for a truth commission, where everybody has to come forward and say exactly what happened and exactly what followed from it.
I don‘t think he‘s going to be willing to do that. The law was broken, the Constitution was undercut. And the great successes they talk, like the great successes of finding weapons of mass destruction in Iraq—after all, it was Dick Cheney who said the war in Iraq would be such a success, it would be over in a couple of weeks. We‘ve now been there a lot longer than we were in World War II.
No, I‘m not willing to let Dick Cheney write the history of this country. Not with his views.
SCHULTZ: Senator Pat Leahy, always a pleasure.
Chairman of the Senate Judiciary Committee.
Thank you, Pat. I appreciate it.
LEAHY: Good to be with you, Ed. Glad you‘re here.
SCHULTZ: You bet.
OK. So, we get it, folks. Everyone is really upset about AIG.
Outraged by those bonuses.
But I‘ve got to tell you, I‘m with The King on this one. I say little less conversation and a little more action.
You‘re watching 1600.
SCHULTZ: Welcome back to 1600.
Now I know this AIG story is big. It‘s big. It‘s real big. I mean, it‘s like a whopper, you know?
I feel like a game show host. I mean, we‘re stuck on the word “outrage.”
Outrage! You outraged? Well, come on down.
I mean—or we could do this other game show—the password is outrage.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: This is so outrageous.
UNIDENTIFIED MALE: Greater outrage.
UNIDENTIFIED FEMALE: Outraged.
UNIDENTIFIED MALE: Outraged.
UNIDENTIFIED MALE: Much outrage.
UNIDENTIFIED MALE: Outrage.
UNIDENTIFIED MALE: The latest outrage.
(END VIDEO CLIP)
SCHULTZ: Now, we wanted to stop before hitting double digits, but you get the point. I mean, politicians, talk show hosts, editorial writers, and even the president is outraged.
(BEGIN VIDEO CLIP)
OBAMA: People are rightly outraged about these particular bonuses.
(END VIDEO CLIP)
SCHULTZ: But can you and I do anything about it? Probably not. But we can ask these jokers in the front office to give the money back.
Folks, I‘ve been saying this for days on the radio, and today a New York Democrat, Gary Ackerman, he stepped up and said the same thing.
(BEGIN VIDEO CLIP)
REP. GARY ACKERMAN (D), NEW YORK: This old school teacher is going to give you a little bit of advice—pay the $165 million back.
(END VIDEO CLIP)
SCHULTZ: All 73 of them, I think they ought to be stepping up like the rest of us and making a sacrifice. After all, it‘s our money keeping them afloat.
Folks, this isn‘t retention money. Heck, 11 of these guys don‘t even work at AIG anymore.
And don‘t give me this garbage about a contract. Contracts are renegotiated all the time in business.
Americans are taking pay cuts, people are losing their homes, health care costs are going through the roof. I mean, it‘s crazy out there. So I guess we have to ask the serious question, when does the selfishness stop in this country?
Where was the outrage a year ago? The last administration protected executive compensation, which I think really set the table for this kind of behavior.
I think this story has the potential of being a wake-up call to all Americans. Conventional wisdom in this country is changing. And isn‘t it ironic President Obama campaigned on change? But I don‘t think he planned on using this roadmap to get there.
Has there ever been a more eventful 58 days for any president? I think not.
Well, who‘s watching over these companies to make sure they‘re doing the right thing with their bailout money?
Well, next up, we‘ll talk to Senator Byron Dorgan about a new proposal to crack down on these bad guys.
You‘re watching 1600 on MSNBC.
SCHULTZ: Welcome back to 1600 PENNSYLVANIA AVENUE. Today‘s AIG hearing -- folks, there is no senator in the Congress that‘s paid more attention to waste, fraud and abuse than Senator Byron Dorgan from North Dakota. Senator, good to have you with us tonight. He took some action already with Senator Cantwell today. You pushed the ball forward and called for a Financial Crimes Task Force. Senator, do you think this is the remedy that we need to straighten this whole thing out?
SEN. BYRON DORGAN (D), NORTH DAKOTA: That‘s part of it. We need a task force down at the Justice Department that‘s going to prosecute financial crimes. This is a disgrace what‘s happening. In some ways, this AIG thing is just pulling back the curtain just a bit on what is a culture of corruption. Lose a bunch of money, and then pay big bonuses, trying to suck it from the tax payer. This is unbelievable and shameless, in my judgment.
SCHULTZ: Senator Dorgan, legally speaking, do you think the Congress can do something about getting this bonus money back and back into the Treasury? Because that‘s not where it was intended to go.
DORGAN: Absolutely. We‘re going to do everything we can. I think we can find a way to claw this back. I have an idea, Ed. Maybe you should ask the CEO of AIG just to send you the envelopes of the bonuses, and the way the employees get it, they have to show up on live television, and see if they‘re shameless enough to claim the bonus.
My guess is most of them would go unclaimed in that circumstance. Let‘s see if they want to pick up bonuses on live television.
SCHULTZ: Senator, how damaging do you think, if at all, to the president this might be in slowing down his agenda? Because the confidence around the country seems to be eroding when it comes to helping financial institutions out, on the heels of this kind of information.
DORGAN: You know what, the American people need to know this information. We need this transparency. The president is angry about this. This isn‘t his fault. He wasn‘t—this wasn‘t on his watch. And listen, the other thing is, these are relatively small compared to the Merrill Lynch bonuses made in December. That was a company that lost 27 billion dollars and gave 3.6 billion dollars in bonuses. They paid 694 people, each of them more than one million dollars in bonuses for a company that lost 27 billion.
And then Bank of America took them over and got 20 billion dollars in Tarp Funds. I‘m just telling you, this is a culture of corruption. I‘m glad the thing has boiled over. People are furious and so am I. We need to put a stop to all of this.
SCHULTZ: This task force that you‘re putting together, would it have subpoena power? Would it be able to really get into the devil and the details to find out how we got here and why the American people weren‘t told about this beforehand?
DORGAN: There‘s two things. One is a select committee of the Senate with subpoena power. No one knows the whole narrative of what has caused this financial crisis. I and Senator McCain have proposed a select committee of the Senate to investigate. That would have subpoena power.
The second thing is we asked Attorney General Holder to create a financial crimes task force to prosecute criminal behavior. I‘m telling you, I believe there‘s plenty. Andrew Cuomo, the attorney general of New York, is doing it. It‘s federal money. We ought to be doing this as well.
I hope we‘ll do both things, create a select committee in the Senate to investigate, and then a financial crimes prosecution task force at the Justice Department. The American people deserve that.
SCHULTZ: Senator, good to have you on with us tonight. Appreciate you being here and we‘ll watch this task force. Something needs to be done, no doubt about it.
DORGAN: Thanks, Ed. It‘s good to be with you.
SCHULTZ: You bet. Let‘s go to our panel tonight. There‘s a lot to talk about. Lars Larson, Westwood One talk show host is joining us tonight. Republican strategist John Feehery, who is the founder and CEO of the Feehery Group, and Nia-Malika Henderson, who is a White House reporter for the “Politico.”
John, we‘ll start with you tonight. Is this a political opening for the Republicans?
JOHN FEEHERY, REPUBLICAN STRATEGIST: I think it might be. There‘s a populist outrage against what AIG did and there‘s a populist outrage against bail outs. Republicans have consistently in the House and the Senate been against bail outs. The Bush administration was for it, but they‘re gone now.
If you‘re going to do any more bailing out, you‘re not going to get any help from the Republicans. From that standpoint, it‘s not a bad political issue for Republicans.
SCHULTZ: Lars Larson, you‘re pretty tough on lefties all the time. What grade do you give the president today for stepping up and saying, hey, the buck stops on my desk, I take responsibility?
LARS LARSON, RADIO TALK SHOW HOST: You know, the problem is that he‘s throwing Chris Dodd under the bus, even though Dodd doesn‘t deserve it. Dodd was calling for tough connections, or tougher restrictions.
SCHULTZ: I don‘t care about Dodd right now. I want to know how the president did today. He stood up and he took responsibility. What kind of grade do you give him for that?
LARSON: I don‘t give him a very good grade because it was his administration, with Tim Geithner, that argued that the restrictions on compensation should be looser than what Chris Dodd argued for.
SCHULTZ: OK. Now, this is the struggle the left and the right and the conversation in this country, because who‘s the winner in this? When did this all start? Who shares the brunt of the responsibility here in your opinion?
NIA-MALIKA HENDERSON, “POLITICO”: Well, I think—I mean, as we talked today in the “Politico,” there does definitely seem to be kind of a circular firing squad here. And it‘s not clear at all who‘s going to finally, you know, be left holding the bag. The president stepped up today and said, the buck stops with him. He‘s going to use this as an opportunity to really push for regulation. In his comments today, he also just plugged his budget and said, we really need to get on with that as well.
SCHULTZ: John, is it too much to ask, where was the transition team? Why didn‘t the Bush people tell the Obama people that this was going down? And we‘ve got billions of dollars sitting here, when most of the money, by record, was given out while Bush was still president?
FEEHERY: Well, part of the transition team was Tim Geithner. This is where the connection between the Bush administration and the Obama administration is so important for Republicans. Everybody is going to be anti-Tim Geithner. His time in Washington I think is going to be fairly short, because he‘s the connection. When he‘s arguing against these strict provisions in the bill—all the buck doesn‘t just stop with Barack Obama. It stops with Tim Geithner. And I think that‘s why he‘s in big trouble.
SCHULTZ: Lars what‘s the call—what‘s your call, Lars, in your opinion, should the president move on the Treasury secretary and get somebody else?
LARSON: I think he should, because Geithner was clearly in charge in New York when he was running the Fed. He was there while the meltdown was happening to begin with. He‘s apparently good buddies with a lot of these guys. And he‘s done some sweetheart deals. This does not look good for him. He should be out of there. He was part of the discussion that pushed those less restrictive covenants into the government‘s deal in the original bailout. So I think he needs to be out.
SCHULTZ: Lars, you look pretty cool tonight. You don‘t seem like you‘re outraged like everybody else. I expected you to come on and tell me how outraged you were. Get cranked up. Aren‘t you outraged?
LARSON: Listen, I got to tell you something, Ed. You‘re my buddy. Even though we come from different political sides of the aisle, I‘ve got to tell you something, this is a mess. But the 165 million in bonuses isn‘t the biggest part. What they‘re doing is taking our eye off the ball. What we should be worrying about is 165 billion dollars in bailout. And how is that going to get paid back to the government if we tell AIG you can‘t pay decent compensation to people who know how to make the deals that will get this money paid back.
SCHULTZ: Well, AIG said today—Mr. Liddy, that they were going to be able to pay this back. We‘ll see. Nia-Malika Henderson, White House reporter for “Politico,” once these hearings are over with, does the story go away? I mean, we can‘t be outraged forever, can we?
HENDERSON: That‘s the thing. It seems like we‘ve had this kind of cycle of compensation packages or outrageous purchases by some of these corporations coming out. It seems like that‘s what‘s happening. I think there‘s a story today about Fannie and Freddie getting some bonuses. So it seems like, you know, this is something that happens once a week and the outrage machine kind of ramps up.
SCHULTZ: John, what would your advice be to the president? Let‘s say that you‘re an adviser to President Obama. You come from conservative roots, but, of course, he has worked across party aisles and wants to be very inclusive. For the good of the country, what would your advice be?
FEEHERY: Fire Tim Geithner.
SCHULTZ: It‘s that simple. Who do you put in there?
FEEHERY: Put somebody else in that‘s not really that closely attached to Wall Street. Have a brand-new plan and a good plan that will fix the banks. I think they need that quickly.
SCHULTZ: Do you think the president bought some time with the public today because he was so forceful and so strong to come out and say hey, the buck is on my desk; it stops on my desk?
FEEHERY: Oh, baloney. When he says, the buck is on my desk, what he‘s really saying, it‘s my problem, so blame me, which I think a lot of the American people are going to do. That‘s not good for the president. He needs to find a scapegoat.
SCHULTZ: And finally, Lars Larson, does President Bush bear any responsibility whatsoever in this, Lars? Or are you going to give him a pass?
LARSON: I‘m not going to give him a pass. I think this is a mess. Although, I do want to point this out: two presidents and a Congress have bought the argument that AIG was so important and so big we couldn‘t let it fail. A lot of experts say that, too. And Ed, I don‘t know that I‘m smart enough to say they were wrong, we could have let it fail, their business would have been picked up by someone else.
Why don‘t we really get outside the box, pick my favorite turnaround guy, Mitt Romney, make him the Treasury secretary, and put him in charge of turning America around. Wouldn‘t that be wild? That would be a reach across the aisle.
SCHULTZ: All right, ladies and gentlemen, stay with us on the panel. We‘ve got so much more coming up. But coming up next, Representative Paul Kanjorski will join us live here on 1600. He chaired this AIG hearing today. We‘ll find out how outraged he was.
And is he talking about accountability? You bet. You‘re watching 1600.
SCHULTZ: Welcome back to 1600. AIG CEO Edward Liddy went before Congress today to try to explain why the company paid out 165 million dollars in executive bonuses. Liddy has been testifying for more than four hours, taking a lot of eat from law makers who are justifiably furious about this.
And joining me now, the man who chaired today‘s hearings, Congressman Paul Kanjorski, Democrat from Pennsylvania, the chairman of the House Subcommittee on Capital Markets. Congressman, thanks for your time tonight. Do you feel like you accomplished anything tonight with this testimony today? Was today a good first step?
REP. PAUL KANJORSKI (D), PENNSYLVANIA: Ed, I think today was an excellent first step. Let me say, really, what we have to keep in mind is the big picture. What‘s important is that we put all the focus on getting the recession or depression that may be out of the way and get recovery started in the United States.
In order to do that, we have to stabilize the real estate market and we have to bring back the financial industry, insofar as the credit freeze and crisis has frozen us up. To do that, we‘re forced to pump in money in equity into banks and to buy troubled assets.
Every now and then, mistakes are made and that‘s what happened here at AIG. We had to get those disclosed. We had to talk about them. And we have to get the people comfortable with what happened. Not necessarily accepting of it; they have a right to be outraged. And certainly I was outraged. But we have to get to the main issue, and that‘s a focus to get the recovery started in the United States.
SCHULTZ: Congressman, talk radio airwaves across America absolutely filled with the outrage you‘re talking about. But there really seems to be a disconnect from what‘s being said across the country and also what was being said at the hearing today. There‘s still a reluctance on the part of the CEO to give that money back. How does that play with you?
KANJORSKI: Well, you know, he made an executive decision that I didn‘t necessarily agree with. And I‘ve been in communication with Mr. Liddy over a period of the last 60 days. So this isn‘t a new issue to me. And those people that feign absolute shock that these bonuses were out there or the decision had to be made, I don‘t know where their heads are. They must have been in the ground.
We have had knowledge of this and some of us have been working very closely with AIG and Mr. Liddy over the last 60 days. Towards me, I thought we had an understanding that he was going to disclose the relevant documents and contracts so that we could look at them and determine what possibly could be done. Instead, as he testified today, he confided with the Federal Reserve, kept it to the Federal Reserve and himself, and made the decision on Friday night to pay the bonus, and that‘s the first time that he disclosed that decision to us.
So we felt that if we didn‘t agree—I didn‘t agree with that decision.
I would have contested it. There isn‘t any reason not by examining Mr. Liddy—look, I tried cases when I was a private tort lawyer against his insurance company. He didn‘t just settle every case that was there. A lot of times we had very strong cases, but we had to go all the way through a jury trial to win. He could have applied the same principle.
SCHULTZ: Mr. Chairman, are you comfortable with the position of the Treasury Secretary, Mr. Geithner, on this? There seems to be some question about what he knew, when he knew it, and why he didn‘t push forward for this money to be given back, or why it was even dished out in the first place. Is he on shaky territory in your opinion?
KANJORSKI: I think he made some calculated errors also in not pushing back and going along. He waited too long and said well, the money‘s paid out, now get it back.
SCHULTZ: Do you think that will cost him his job?
KANJORSKI: Nah. Look, I hope it won‘t cost him his job because, you know, everybody can make a mistake. Somebody—everybody can make different judgments. We don‘t want to fire people. That‘s not going to give anybody satisfaction. We‘re not going to lose people. What we have to do in Treasury is start filling those spots that are unfilled right now, that are absolutely essential. And in the administration and the president has been trying to do that.
But, you know, we don‘t really think about it, but we‘ve heaped in two months a tremendous amount of activity on the president, his cabinet. And they don‘t usually get up to speed until May, June or July of the first year of the new presidency. And we‘re demanding a faster action because of the crisis in the country. And we expect the president to respond that way.
Let‘s have a little, not mercy, but a little tolerance that we have to do this right. We have to get the right people. And we have to press as hard as we can. And there will be some mistakes.
SCHULTZ: Don‘t you think that these hearings are crucial when it comes to the confidence of the American people? How many more missteps are we going to have? How is the Congress going to be able to go back to the American people and say well, we got to help this group out a little bit more after all of this malarkey that has taken place?
KANJORSKI: Ed, you‘re absolutely correct. That‘s exactly what I told Mr. Liddy when we discussed this 45 days ago. I said, you know, you‘re making this burden. I‘m one of the people that came down here in September and worked on the first rescue package. I remember how hard it was to sell. And we lost the first vote and had to go back.
SCHULTZ: Thank you, Congressman. We‘ve got tot go live now. President Obama is holding a town hall meeting in California and he‘s talking about AIG.
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