WASHINGTON, May 13 – Every month or so another AIG story emerges
that raises the ire of Congress and the public, at least for a while.
While
most of the public attention has been focused on the evolving bonus
scandal, even more disturbing is the fact is that, at the end of the
day, U.S. taxpayers have spent $170 billion bailing out the company
that has endangered their economic security.
On Wednesday it was a “who knew what and when”
about the AIG bonuses. New documents show that the Federal Reserve Bank
of New York knew about the AIG bonus millions several months before
they turned into public scandal.
Earlier this month, AIG let on that it was paying out nearly $1.5 billion in bonuses, some $454 million in “performance” bonuses – three times the $165 million the company had previously disclosed.
Congress
responded sharply – demanding that the bonuses be taxed at a rate of 90
percent, although the bill didn’t go anywhere. A March Gallup poll showed what the public thinks: some 76 percent want the government to intervene.
But nothing much came of the collective outrage, except that AIG
quietly returned (or promised to) about a third of the original $165
million.
On Wednesday, AIG CEO Edward Liddy faced another
congressional hearing, this one at the House Committee on Oversight and
Government Reform.
Congressman Dennis Kucinich (D-OH) grilled Liddy, focusing on AIG’s payment of $90 billion to its domestic and foreign trading partners.
Kucinich
used that story to point out what’s been wrong with this bailout all
along: The culprits have been rewarded – failed executives get their
bonuses and their business partners collect on their bets – while
everyday taxpayers have endured the losses, since there’s no government
bailout to swoop in and make them whole.
States such Michigan, Florida and Ohio
have filed class action suits against AIG over the past year on behalf
of hundreds of thousands of taxpayers – public servants like policemen,
firemen and teachers – whose pension funds evaporated because of AIG’s
mismanagement and misconceptions.
Even more frightening is the
fact that the very same taxpayers who have lost millions now own 80
percent of AIG, so they are losers on two accounts. They own a company
whose share value has plummeted, down 98 percent from where it stood
two years ago, at $1.60 on May 13.
While there is a lot of
uncertainty whether the bailout “works” and what the future might hold,
one thing is certain: the taxpayers are last in line.
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U.S. PIRG serves
as the federation of non-partisan, non-profit state Public Interest
Research Groups. PIRGs are public interest advocacy groups that take on
powerful interests on behalf of their members.
