AIG Spending Must Be Reigned In With Caution (Sen. James Inhofe)

Well, if you, like me, thought that things couldn’t get much worse than the trillion dollar bailout messes we’ve gotten into over the past few months, you were probably outraged upon learning the news about the taxpayer funded bonuses being given to AIG execs. The House passed a bill that would tax those bonuses at 90% to get the money back. The Senate may consider something similar this week, and I think it’s the Senate’s job to proceed carefully as we do so. Though I think all of us would support taking back the bonus payments, we need to give due consideration to the means by which we do this.  The Constitutionality of the House’s version of the bill is questionable and the precedent it sets is potentially very dangerous. I don’t think anyone is well served by Congress passing something of dubious Constitutional merit. We shouldn’t seek to hastily pass something that will sound good at home, but will inevitably be tied up on protracted legal battles–just for the sake of saying we did something. What good is done if we basically legislate a guaranteed legal dispute?

The reason many are seeking expedited consideration of an AIG bonus bill is clear enough—to cover up the past mistakes of the majority party and the Treasury Secretary. There was a provision buried deep in the Democrats’ stimulus bill that allowed these bonuses to be paid, and it was inserted at the behest of the Treasury secretary, Tim Geithner.  And this gets us to the root of the problem: the bailout approach that Secretary Geithner epitomizes. There is a complete lack of any policy framework, explanation of principles, or coherent approach in dealing with our financial situation.  I believe there is a lack of any transparency whatsoever and a seeming indifference to the taxpayers’ interests. The $700 billion bailout bill last October was Congressional ratification of Tim Geithner’s approach to big banks: bail them out.

Well, we are now trillions of dollars past that line and we’re beginning to comprehend the course on which that decision has set us. And I personally believe that trillions of dollars past that line, we’re no better off.  I say enough. Tim Geithner’s bailout approach has taken us too far. Instead of Congress using the AIG bonus issue to cover up Tim Geithner’s mistakes on allowing those bonuses, we should take it as an opportunity to fundamentally reevaluate Geithner’s bailouts thus far and put an end to any more bailouts. With the revelations of how AIG is being used to funnel money to foreign banks to make them whole on bad investments at the expense of the US taxpayer, we need to put an end to the Geithner approach on bailouts. The taxpayer deserves no less. Under Tim Geithner, the $180 billion in taxpayer money AIG has received is being used to funnel money to AIG’s counterparties, mostly big investment banks and foreign banks.

In light of all of this, I introduced legislation yesterday to do more than deal with the bonuses.  My legislation gets to the root of the problem, the $180 billion we’ve already given to AIG. It’s my understanding that the last $30 billion for AIG from TARP has been agreed to by Treasury, but has not been drawn down yet. My legislation would prevent that from going forward. The taxpayer has given AIG about $150 billion so far. I think it’s completely reasonable to say that once a single company gets $150 billion from the taxpayer, it should be cut off from getting more.