Geithner Aides Worked With AIG For Months On Bonuses

[bajamary]

Wall Street Journal:


WASHINGTON -- Since the fall, senior aides to Timothy Geithner have closely dealt with American International Group Inc. on compensation issues including bonuses, both from his time as president of the Federal Reserve Bank of New York and as Treasury secretary.

The extent of their involvement, which wasn't widely known, raises fresh questions about whether Mr. Geithner could have known earlier about AIG's $165 million in bonus payments. When the bonuses sparked a political firestorm last week, Mr. Geithner said he learned about their full scope in early March, just days before they were paid.

http://online.wsj.com/article/SB123777083390610069.html?mod=article-outset-box

[Holly_Hobby]

1. He was too busy amending his taxes n/t

[frazzled]

2. What does "work with" mean?

It could mean "work with them to insure payments were reduced or suppressed, without the government having to come in and legally estop payments itself." It would explain why Geithner and the administration seems to have been caught off guard at the last moment. It's not that they didn't know that bonus contracts were on the books; it's that they had a risk aversion to having the government abrogate the contracts as opposed to having the company itself do it. Geithner may have thought he was on track to have at least some of those payments suppressed (this is certainly what Kanjorksky seemed to believe he had done with AIG management). Turns out, as Liddy testified, that AI worked together only with the Fed to let the bonuses go forward.

This is the separation of issues that has failed to take place in our discussion.