Treasury Knew About Bonuses, But Geithner Didn’t?
The AIG bonus plot thickens, but only slightly.
Because while it appears that people in the Treasury department knew about the bonuses, they didn’t think it was necessary to inform their new boss about them?
“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.”
The New York Fed even went so far as to warn Treasury staffers that the bonuses were a hot-button issue. In the past, the memo says, the “retention,” or bonus, issue has drawn the attention of both Capitol Hill staffers and the media. The New York Federal Reserve forwarded further details of the plan to Treasury on March 5 and even more specifics in a March 9 memo, which Treasury officials had previously said was their first detailed warning of the bonus trouble.
The Treasury Department official says the fault appears to lie with career staffers at the department who failed to report the imminent bonus deadline up the chain to Geithner. This failure may be a by-product of the difficulty Geithner has had staffing up at Treasury. But he still has personal vulnerability on the issue. It was Geithner, as head of the New York Federal Reserve, who negotiated the AIG bailout last September. At that time, he could have sought to get bonuses repealed as part of the massive government loan.
As I’ve stated before, the bonuses are obviously extremely bad form and people have a right to be mad. Hell, I’m mad too.
But Americans need to be cautious about getting too angry over something that’s relatively small potatoes because the only thing that can stop the fixes we need in this financial crisis is exactly this type of disproportionate populist rage.