Earlier this week, after the AIG bonuses were revealed, Rep. Barney Frank (D-MA) called for the replacement of company executives. “Since the federal government … now essentially owns that company, maybe it’s time to fire some people.” Frank told ThinkProgress that, “when you are trying to undo something, it is often not the case that the people who did it are the ones to put in place.” So far, however, the administration has not embraced Frank’s call.
Last fall, as Wall Street crumbled and just one week after the federal government bailed out AIG, the firm’s executives spent $440,000 on manicures, facials, pedicures, and massages at a luxury resort in California. At the time, Obama was a vocal proponent of firing AIG executives. During an October 7, 2008 presidential debate with Sen. John McCain (R-AZ), candidate Obama declared, “those executives should be fired”:
OBAMA: It means we are cracking down on CEOs and making sure that they are not getting bonuses or golden parachutes as a consequence of this package [TARP]. In fact, we just found that AIG — a company that got a bailout — just a week after they got help, went on a $400,000 junket. I’ll tell you what. Treasury should demand that money back, and those executives should be fired.
In October, the revelations about AIG’s luxury retreat sparked widespread outrage, just as the AIG bonuses are doing today. That didn’t stop AIG, however. In November, the Washington Post reported that AIG “plans to pay out $503 million in deferred compensation to some of its top employees, saying it must tap the funds to keep valuable workers from exiting the troubled insurance giant” — the same rationale AIG CEO Edward Liddy is using today.
Speaking to reporters outside the White House this afternoon, Obama took full responsibility for the White House’s handling of the bonus issue, as Greg Sargent noted. “Asked if he wished he’d known about the bonuses sooner, Obama said, in the course of answering: ‘Ultimately, I’m responsible. I’m the President of the United States…The buck stops with me.’”