We said it in April and we’ll say it again, Treasury Secretary Tim Geithner lied under oath when he told Congress he knew nothing about the $168 million in retention bonuses that were paid to AIG employees this Spring. Senator Dodd has said that 6 weeks prior to the date Geithner claims he first heard of these bonuses, that senior Treasury officials were not only aware but they also lobbied him to introduce an amendment that would allow these payouts to occur.
SIG TARP Neil Barofsky testified before the House Oversight Committee yesterday and came to a different conclusion. His report blames lack of concern and communication within Treasury. Essentially he accepts Geithner’s excuse that no other Treasury or Fed officials informed him until just days before the payments were to be made. Still his report blames Geithner and Treasury for the mistakes and lack of oversight. And I would imagine that privately Barofsky would concede that it’s simply not plausible to believe that Geithner was also not aware of these payouts.
We’ve got the 3 best clips from Barofsky’s testimony yesterday and some choice quotes.
- Committee Chairman Edolphus Towns (D., N.Y.), asked Mr. Barofsky if he would characterise the lack of cooperation as a break-down in communications between the Treasury and the New York Federal Reserve.
- “I think that would be kind, to have it as a breakdown,” Mr. Barofsky said. “Communications were virtually nonexistent.”
- As guardians of the taxpayer-funded bailout, the Treasury had specific responsibilities to oversee executive compensation that the New York Fed did not, Mr. Barofsky said. To the New York Fed, the $168 million in retention payments was not significant compared to the size of the government’s $180 billion bailout of the insurance company and did not identify it as a politically explosive issue.
- “They didn’t think it was that big a deal — $168 million was a drop in the bucket,” Mr. Barofsky said. “Their concern was paying back the debt. The Federal Reserve was looking at this as a creditor.”
- Mr. Barofsky agreed with lawmakers’ comments that “retention payments” paid to AIG administrative employees, including to a file administrator and kitchen assistant, weren’t necessary to keep irreplaceable employees from resigning.
- “Somebody who made the decision to give these bonuses made the decision to make everyone happy and not to act in the interest of American taxpayers,” said ranking member Rep. Darrell Issa (R., Calif.).