In her memoir, "Madam Secretary," former Secretary of State Madeleine Albright recounts an ongoing debate among members of the Clinton Cabinet about sending U.S. troops to Bosnia. After Gen. Colin Powell, then chairman of the Joint Chiefs of Staff, had repeatedly argued against the use of force, a frustrated Albright turned to him at one point and asked: "What are you saving this superb military for, Colin, if we can't use it?"
It's too bad Albright wasn't around a couple of weeks ago to turn to Treasury Secretary Tim Geithner and ask: "Why did we buy this company, Tim, if we can't deny their executive bonuses?"
There is simply no justification for rewarding executives of AIG with those obscene, unearned and undeserved bonuses. None. And his bungling of the issue raises even more questions about Geithner's fitness for the high office of treasury secretary than his failure to pay his taxes.
Frankly, Geithner's story just doesn't add up. He says he first learned about the bonuses on Tuesday, March 10, five days before they were due to be paid. Why? Treasury Department staff and officials of the Federal Reserve had known about them for at least three months. Once he took over as secretary, didn't Geithner do his homework?
As soon as he found out about them, Geithner complained to AIG Chairman Edward Liddy. But he failed to inform President Obama about the explosive bonuses until Thursday evening, March 12, 48 hours later. It wasn't until Monday morning, March 16 -- the day after his top economic advisors condemned the bonuses but insisted "their hands were tied" -- that the president expressed his own outrage and demanded that the Treasury Department explore every available legal option to stop the bonuses.
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By that time, Obama's expressed outrage came too little, too late. AIG had already sent out its bonus checks, by direct deposit, on Saturday night, March 14. All of which could have been avoided if only Geithner had told Liddy: "You're fired!" Or Obama had said the same thing to Geithner.
Washington is the world capital of spin. But we've never heard such absurd political spin as we have from those trying to defend the AIG bonuses.
We had no choice but to pay the bonuses, we're supposed to believe, because they were part of signed contracts and, harrumphed Obama economic czar Larry Summers, "The government cannot just abrogate contracts." Baloney. Ask auto workers about wage and benefit contracts they were forced to break as part of the government's rescue plan. The fact is, previously signed contracts are broken every time a company goes bankrupt. And AIG would be in bankruptcy if we hadn't bailed it out.
Besides, lest we forget, AIG is an insurance company. Since when has an insurance company been in a hurry to pay claims? Their standard procedure is to challenge, delay and deny -- which they should have done in this case.
We're also supposed to believe that these so-called "retention" bonuses were necessary to keep skilled executives on the job. In other words, if we didn't reward the very people who destroyed AIG, and helped destroy the American economy, they might leave and go elsewhere. Let's hope so! And good luck finding another high-paying job anywhere in the middle of this recession. Ironically, 52 out of 418 executives did quit AIG -- as soon as they picked up their bonus checks.
It would be unfair to blame this whole mess on Tim Geithner. There's enough blame to go around. Ed Liddy should never have paid them. Congress should not have removed language limiting bonuses from the stimulus bill. Hank Paulsen and George Bush should never have allowed them in the first place.
But Geither can certainly be faulted for failing to grasp the seriousness of the issue, and failing to protect both the president and the American people. What the treasury secretary doesn't seem to understand is that a lot has changed since those contracts were first entered into. AIG has gone from A-OK to IOU. And AIG has a new owner: American taxpayers.
As AIG's new owners, we're not bound by any pre-existing contracts. We have every right to say to AIG executives: We're your new owners. We're not going to pay those bonuses. And if you don't like it, you can sue us.
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We taxpayers own AIG. So let's start by ending business as usual.
-- Press is host of a nationally-syndicated radio show and an author.
