The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: Reilly Diefenbach who wrote (192932)	3/24/2009 12:21:56 PM
From: Jim McMannis	Read Replies (1) of 306849

Da Lawyers made him back off ...oh brother. ------------------- Bernanke wanted to sue AIG news.yahoo.com AP Federal Reserve Chairman Ben Bernanke wanted to sue AIG to stop the company from handing out hundreds of millions in bonus payments over the past two weeks. But Federal Reserve lawyers advised against litigation, fearing the bank would lose the suit and allow AIG to recoup huge punitive damages. Bernanke also said the Fed knew about the bonuses last fall and warned AIG management it had “deep concern” about the payouts. “Legal action could thus have the perverse effect of doubling or tripling the financial benefits to the AIG-FP employees,” Bernanke told the House Financial Services Committee Tuesday morning. AIG told the Federal Reserve that the bonus payments were mandated by binding contracts, even those to its financial products division, which was responsible for creating the credit default swaps that contributed to the current economic crisis. “My reaction upon becoming aware of these specific payments was that, notwithstanding the business purposes that might be served by this action, it was highly inappropriate to pay substantial bonuses to employees of the division that had bee the primary source of AIG’s collapse,” Bernanke told the committee. Fifteen of the top 20 employees at AIG who received bonuses have agreed to give them back — a refund that totals about $50 million — New York Attorney General Andrew Cuomo annouced Monday. Republicans have jumped on the AIG bonuses as a political issue, blaming the Obama administration and Treasury Secretary Timothy Geithner for failing to stop the company from distributing as much as $165 million in bonus payments. “An unfortunate partisan effort has slipped in here,” said Financial Services Chairman Barney Frank (D-Mass.), who stressed that Bush administration Treasury Secretary Henry Paulson also agreed to give AIG government funds. Republican committee aides distributed a timeline detailing the sequence of events that lead up to the AIG bonus controversy. But some Democrats also had questions about the events. “We’re not sure what happened when and in what circumstance,” said Rep. Paul E. Kanjorski (D-Pa.), who told Geithner that Americans “feel boxed out of what’s happening in this economic crisis.” Kanjorski said that lack of information by the Treasury Department and recipients of government funds will make it extremely difficult for Congress to authorize the additional financial bailout money for the administration plans to request. “We recognize it’s going to be extraordinary difficult,” said Geithner.

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