TPM News

While we've all been focused on those AIG bonuses, there's been a major development in the Wall street bonus saga that seemed, a week ago, like the ultimate in outrageous corporate behavior.

A court ruled yesterday that Bank of America will have to turn over to New York Attorney General Andrew Cuomo the names of the Merrill Lynch employees who received a total of $3-4 billion in bonuses. Bank of America, which since the start of the year has owned Merrill, had been resisting giving Cuomo the information.

Cuomo said he could release the names as soon as today.

Merrill approved the bonuses last December under then-CEO John Thain, on an accelerated schedule, apparently to ensure they went into effect before the firm came under the control of B of A.

It seems Fannie Mae missed the memo: massive bonuses are out of style. The mortgage finance company plans to pay four top executives retention bonuses of $1 million each, more than double the amount paid out last year, according to a document filed with the SEC. Like bonuses paid to executives of Merrill Lynch and AIG, the payments are controversial because Fannie Mae recently received billions of dollars in federal aid and was essentially taken over by the government in September. Fannie Mae said that financial regulators approved the bonuses because keeping top employees "was essential to ensure our viability through 2010." (Associated Press)

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House To Vote On Bonus Tax Today The House of Representatives will vote today on a bill to tax bonuses of over $250,000 at financial institutions receiving bailout money, at a rate of 90 percent. Charlie Rangel explained to reporters: "We figured that the local and state governments would take care of the other 10 percent."

Obama In California -- Will Appear On Jay Leno President Obama is in California today, with a 1:30 p.m. ET tour of the Edison Electric Vehicle Technical Center Garage of the Future in Pomona, and a speech there at 1:45 p.m. ET. At 4:10 p.m. ET he will visit the Miguel Contreras Learning Center in Los Angeles, where he will be accompanied by Gov. Arnold Schwarzenegger, Mayor Antonio Villaraigosa, and Labor Secretary Hilda Solis. At 7:20 p.m. ET, he will tape an appearance on the Jay Leno show. And then tonight he will head back to Washington.

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Who in the Obama Administration pushed to weaken a key anti-bonus provision in the stimulus bill last month? Sen. Chris Dodd, who wrote the provision -- and ultimately agreed to defang it -- isn't saying.

Ever since the AIG story broke, we've heard about the company's binding contracts as a key barrier to the government blocking bonuses to AIG executives.

It turns out that a provision in the stimulus, which passed in February, prohibits the government from blocking any bonuses that were part of contracts agreed to before February 11. That provision has taken on new relevance this week because it would complicate any government effort to claw back the AIG bonuses.

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AIG CEO Edward Liddy told the House Financial Services Committee today that the Federal Reserve had okayed his company's planned bonuses in advance -- and now Time magazine reports that the Treasury Department also knew about the ticking political time-bomb earlier than it has acknowledged.

As the magazine reports:

"Treasury staff was informed about the new bonuses in a Feb. 28 memo that the March 15 [bonus-payment] date was upcoming," a Federal Reserve source tells TIME. A Treasury Department source, speaking on background, confirmed the e-mail memo and its contents, saying, "Everybody knew that [AIG] had a retention issue."


When the debate comes down to a Nixon-style "what did he know and when did he know it," things aren't looking good. And we may have just reached that point for Treasury Secretary Tim Geithner.

Racked by negative coverage of its new chairman and its de facto talk-radio leader, the GOP is in need of a cause to rally around -- and it's found one in the storm of public anger over AIG.

Rep. Connie Mack (FL) today became the first Republican to call for Treasury Secretary Tim Geithner's resignation over the AIG bonuses controversy, a call quickly seconded by Rep. Darrell Issa (R-CA). House Minority Leader John Boehner (R-OH) took the middle ground by warning ominously that Geithner is "on thin ice."

Of course, Republican outrage at Geithner is to be expected. It's the lukewarm support coming from Democrats that should most concern the Obama administration.

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AIG chief Edward Liddy endured his anticipated ritual flaying today by Capitol Hill lawmakers angered by those bonuses. But, as Josh has been writing about over at TPM, there's mounting evidence that some current and former AIG execs could have much more to fear than angry questions from Gary Ackerman when all is said and done.

Since at least June 2008, the Justice Department has been investigating (sub. req.) whether AIG intentionally -- and criminally -- overstated the value of its credit default swaps, hiding its dire position from investors and government regulators. Joseph Cassano -- who during the period at issue ran AIG's financial products unit, AIGFP, which made those disastrous swaps, out of a London office -- has reportedly hired a lawyer in connection with that investigation. Britain's Serious Fraud Office is said to be on the case as well.

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While Congress was focused today on grilling AIG over the executive bonuses, the two parties' House campaign committees have been doing their own back and forth over which party deserves the blame for it.

The NRCC today sent out a press release to the districts of targeted Democrats, accusing them of supporting the AIG bonuses by having voted for the stimulus bill. This goes back to the fact that an 11th-hour amendment to the stimulus bill limited executive compensation on financial institutions receiving bailout money, but didn't apply the limitation retroactively to prior contracts.

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TPMDC first reported last week on the Obama administration's plans to consider charging veterans' private health insurance for injuries suffered during their service. The proposed move ignited a firestorm on the right in recent days, with the Drudge Report picking up on a critical press release from the American Legion and sparking a letter of protest to the administration this morning from 61 House members.

The scandal abruptly cooled this afternoon, however, when House Speaker Nancy Pelosi (D-CA) told a gathering of veterans' groups that the White House had agreed to kill the idea of charging third parties for service-related veterans' health care. Pelosi said:

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