scenes from a meltdown

Live-Blogging the AIG Bonus Hearing

AIG CEO Edward Liddy is testifying in front of the House Financial Services Committee today. You can watch it live at CNN, which has a pretty good feed, or, presuming you have a life, check in here, as we’re live-blogging the fun after the jump.

10:20 a.m.: We’re late getting in here, but we don’t feel that bad, as Treasury secretary Tim Geithner and Ben Bernanke have failed to show up as well. (Apparently they are busy, but will come another time.)
10:22 a.m.: Barney Frank starts out lambasting his Republican colleagues, saying they “left their fight in the gym” when it came to questioning Ben Bernanke. Barns on the other hand doesn’t go to the gym, and wants the people to know he has Brung It today. He reads from the bonus contracts, which basically say that AIG execs get bonuses whether they make the company money or not, and deems them “heads they win, tails they break even.” In your face! He also says that he wants the names of the people who received the bonuses to be released (the Post has already gotten started on this) and finishes with a bang: “Let’s bring a lawsuit as the owners against the people who did damage to the company.”
10:30 a.m.: Representative Paul Kanjorski states the obvious: “Something is seriously out of whack, and AIG needs to fix it now.”
10:38 a.m.: Representative Spencer Bachus is empathetic to Liddy. He likens the scapegoating of the AIG to a game of “Pin the Tail on the Donkey” and makes the point that most of the people who caused the problems are gone. “You can vilify this new management if it makes you feel better, but resolving a company as large and complex as AIG is no easy task,” he said. “The government trying to get more involved than it is is just going to be a sad experience.”
10:40 a.m.: Representative Gary Ackerman, whose trademark lapel carnation is in one of those water-thingies, ostensibly in preparation for a long day, says he’ll try to keep to the time alloted him (two minutes). “There’s a tidal wave of rage,” he says, because “the taxpayer knows they are the ultimate sucker.” AIG “figured out how to package smoke and sell it on the marketplace for billions of dollars.” He wants to know how they were allowed to do this?
10:45 a.m. Representative Carolyn Maloney comes out strong, calling it “morally reprehensible and irresponsible to expect bonus money for bringing a corporate giant to its knees and paralyzing the national economy.”
10:50 a.m. Representative Paul Hodes thinks he’s clever by saying “AIG now stands for, Arrogance, Incompetence, and Greed.”

11:07 a.m. Now it’s time for state regulators to drone on about the exact ways in which AIG failed, and it’s totally boring. Who needs this granular knowledge? We want fireworks! We’ll be back in twenty or so when Liddy gets into the Judas chair.

11:39 a.m. The voice of Barney Frank brought us back momentarily, but they’re still exchanging platitudes with the lady from the Government Accountability Office. She’s cute, but snooze.

11:45 a.m. Ackerman is back, and he has been working on his one-liners. He’s all, what is the deal with AIG? “It’s like snake-oil salesman selling you jars of snake oil, and they don’t even have oil in the jars,” he says. And: “There’s a great company called ‘I Can’t Believe It’s Not Butter’ … at least they have the decency to tell you it’s not butter. This is an insurance company that doesn’t have money to pay out its claims! If they called it, ‘I Can’t Believe It’s Not Insurance,’ then no one would buy it.” The audience laughs. “I know, it’s a funny joke I made up,” Ackerman says. “But it’s not funny, because all of us who are laughing are crying and getting angry and enraged … Now that the tide has gone out, there’s a lot of people trying to cover their bare assets. And they don’t have the wherewithal to do it … “
11:48 a.m. Saying that we need to figure out how to regulate this thing, Ackerman says, “We need the guy from TV with the bells and whistles going off.” Oh, dear.
11:55 a.m. We’re breaking, because Liddy hasn’t arrived yet. “We are STILL waiting for the main part of this show,” the CNN reporter says, sounding peeved. “Edward Liddy was SUPPOSED to be testifying at 11:30.” The cameras focus on a bunch of Code Pink protesters who are yelling things like, “We want our money and our country back,” and holding signs that say, “Fire Geithner.” Who are those people, actually? What are their lives like? We can’t begin to fathom.

12:27 p.m. Christ. WHERE is Liddy? It’s like he’s trying to make a dramatic entrance. In the meantime, here is the text of his opening remarks.

1:26 p.m.: We’re back! The Code Pink protesters have been chastened (“Signs DOWN NOW!”) and Liddy is sitting in the hot seat. Apparently there was some confusion earlier, and Zippy Duvall, president of the Georgia Farm Bureau, was mistaken for Liddy by a hungry press corps.

Do you think they’re going to treat you fairly?” someone asked him.

If I knew I was going to get all this attention, I’d have gotten my hair cut,” he said. (He is bald.)

In his opening remarks, Kanjorksi reminds everyone that Liddy isn’t getting paid to run AIG, that he has been “pressed into public service, and answered the call,” and that they hadn’t called him there to “harass” him. “I wanted to make that clear, Mr. Liddy, because I’m sure you and your family have received a lot of abuse in the past few days,” he says. All that said! “I’m probably going to be heavy on the gavel today.”

1:30 p.m.: Liddy looks pink and nervous. He’s reading from his prepared remarks, but varying them a little. “Americans are wondering why we should pay these people at all,” he says. “Here’s why: I am trying to prevent a collapse of this company … and therefore the financial system and the economy.”


Then: “I’ve asked people who received bonuses in excess of $100,000 to return at least half of these payments. Some have already stepped forward, and offered to return 100 percent of these payments.”


1:41 p.m.: Kanjorski reads our minds by asking why Liddy didn’t say this sooner. Also, why did he release this information sneakily do it on a Saturday night? We could have avoided this whole outrage thing! He is pissed.
1:41 p.m.: Liddy tries to calm him down “We didn’t do it in the stealth of night … ” He says he told Ben Bernanke. In November. Nice.
1:45 p.m.: Kanjorski, asks if the Treasury knew, too. You can see the wheels turning: Did everyone know except me and my staff?
1:45 p.m.: Liddy says no but the way it works is that he talks to the Fed and then they tell people what they need to know. Or in this case, you know, not.
1:46 p.m.: Kanjorski moves on a little, but he’s still pissed. “Are you aware that TARP funds will run out shortly,” and this affects people other than AIG? And that you can’t go around not communicating important shit to important people about what you are doing with the money?”
1:46 p.m.: Liddy says he’s aware, yes, and from now on he’ll do what everyone wants him to do. He looks so sad. We feel for him.
1:48 p.m.: It’s Representative Scott Garrett’s turn. He prefaces by saying the threats against Liddy and his family are condemnable, which makes us think he’s about to stick it to him. But instead he starts talking about Geithner. How could he have not known about how these bonuses would work given the depth of his Wall Street experience? He says, as if he’s wondering aloud. He sounds like Meryl Streep–character–in–The Devil Wears Prada. He just doesn’t understand why Geithner is so incompetent.
1:53 p.m.: Kanjorksi says he is a patient person but the Code Pink ladies are testing him, and has guard take their signs away. “If I see another sign on-camera, I will have you removed from the room,” he says. The weird ladies give up their signs.
1:54 p.m.: Barney Frank jokes that he’s glad no one was wearing a T-shirt with a message that tested PK’s patience (Get it? Because then he’d have to see boobs!). Then he gets serious and notes that the signs were inappropriate because they said stuff about jail and there was “no evidence of criminality on the part of this witness … having said that” — uh-oh — “some things have to change.”
2 p.m.: Barney says he wants the names of executives who got bonuses but left AIG and didn’t give them back. Liddy says he will give them to him as long as he “absolutely assured that they will remain confidential,” because he’s worried for his employees safety. Barney is unimpressed. He’s like, “Look, we all get threats. I get them all the time.” He says he’ll subpoena for the names. (How’s that for a threat?)
2:03 p.m.: Liddy notes that by the way, the bonuses that were given out were retention bonuses, and the documents that Barney was reading from earlier referred to performance bonuses, which nobody got. He explains that the reason some people got retention bonuses then left was that they had completed their task, which was winding down their books.
2:05 p.m. Spencer Bachus does not ask about bonuses. He asks about mark-to-market accounting. (A “good concept run amok,” according to Liddy.) It occurs to us that Bachus would be great in a bit part on True Blood. He has that perfect southern, anemic look.
2:06 p.m. We got distracted by Bachus’s look, but tuned back in to hear Liddy saying that the total number that AIG has received from the government so far was not the $170 billion often cited but a “squoosh” over $80 billion ($40 billion TARP and $37.8 in a Federal Reserve loan). This reminds us of something we read recently that put all these millions and billions into perspective: A million seconds is 12 days. A billion seconds is 31 years.
2:06 p.m. Liddy ends whatever he’s been saying with the phrase, “The American public is mad as a hornet.”
2:06 p.m. And as if on cue, Gary Ackerman is back with the comic relief. He empathizes with Liddy and his plight. “I’m gonna help you the best I can,” he says.
2:06 p.m. To his credit, Liddy does not roll his eyes, like, great. “I need all the help I can get,” he says nicely.
2:07 p.m. Ackerman continues. “This old teacher’s gonna give you a little bit of advice,” he says (apparently he used to be a math teacher). “Pay that $65 million back. It’s not worth the aggravation.”
Liddy says, well, yes, he’s trying to give it back best he can.
2:11 p.m.: Ackerman: “GIVE IT BACK. It’s not worth it. Because down the road, you’re going to have legislation coming at you that they’re going to call “I Can’t Believe It’s Not Waterboarding.” Zing!
2:20 p.m.: “My fear is that the damage is done,” Liddy says. “We will get the bulk of that money back. They will return it, but they will return it with their resignations.”
2:21 p.m.: Ackerman asks if Liddy is planning to comply with Cuomo’s subpoena for the names of the people who got bonuses. Liddy says he’s going to discuss it with his general counsel and that he’d “do the right thing.”
A long, meaningful silence from Ackerman ensues.
“Does doing the right thing involve complying with the attorney general?” he asks, smugly.
Liddy: “Look, I’m sorry to be evasive—”
Ackerman: “You don’t have to be. It’s simple. It’s a yes or no question.”
Liddy: “I don’t want the names and addresses and pictures of those employees out there.”
This is uncomfortable.
Liddy: “It would be our intent to comply with the subpoena. We comply with everything. We do everything we’re supposed to do.”
2:30 p.m.: Liddy shows some actual frustration: “Mr. Cassano is gone. The architects of this are gone.”
2:34 p.m.: Capuano! The fire of Massachusetts’ loins! He thanks Liddy for being there and for doing his job for $1 a year, as everyone has so far, then lays in: “Do you believe in your heart,” he says. “Do you believe these people [who got retention bonuses] are the only people capable of doing this job? You could have fired these people and replaced them with people just as capable, unemployed people, on Wall Street.”
2:35 p.m.: Liddy tries to talk some sense into him. Fails.
2:36 p.m.: Capuano reiterates that he’s not trying to cast aspersions on Liddy personally, that he appreciates what he is doing as he is “apparently the only good person left on Wall Street.”
2:40 p.m.: Liddy, poor guy, says that there are some other good people left on Wall Street, in particular some “very good people working very hard at AIG on behalf of the American people.” You can see him wondering if he’ll return to an empty office.
2:44 p.m.: Representative Joe Baca of California, apparently having taken a small nap, uses the first few minutes of his time to catch up. What’s a bonus?
Liddy explains that this time around, they were for winding down a book of business.
“These contracts were made before you got there?” he asks.
Uh, yeah.
Baca: “Before Barack Obama was president?”
Liddy: Yeah.
Baca: “So it was the last administration?”
Liddy: Yeah.
Baca: “It’s appalling to me that these people are getting bonuses, and that teachers aren’t getting bonuses. Isn’t that a shame?”
2:46 p.m.: Liddy, admirably resisting the urge to say, “You know what’s appalling? Your uninformed grandstanding,” says “Yes, I have teachers in my family. It’s a shame.”
2:50 p.m.: Some guy we’d guess is from a flat state in the Midwest: “You are one of the good guys. But you said you didn’t want AIG to fail.” [Dramatic pause] “With all due respect, sir, it has failed.” Zing!
2:58 p.m.: Representative Stephen Lynch from Massachusetts is making up for Capuano’s more subdued performance. He’s waving the retaining-bonus contracts around and yelling, “This is like the captain and the crew of the ship saying ‘we’re going to keep the lifeboats for ourselves’ … this is not even malfeasance, this is nonfeasance!” (Is that even a word?) “Our great-grandchildren will have to pay! They don’t work on Wall Street! They’re lucky if they get through day-to-day!” He also mentions, uncomprehendingly, that the contracts were done in 2007, which is, of course, before Liddy became CEO. “What do you have to say for yourself?”
2:58 p.m.: Liddy attempts to respond: “Now, you’re using the word ‘you’ but as I’ve said, those contracts were written before I came to AIG and if I had been there things would be a lot different, so I take offense, sir…”
3:04 p.m.: Lynch: “Well you are meant to take offense.” This guy’s a dick.
3:05 p.m.: Representative Brad Miller starts out by reminiscing about the time Neel Kashkari came to visit Congress, and Miller had stumped him by asking him a question that “he said he didn’t understand.” He then asks a question that makes no sense.
“I’m sorry, I don’t understand,” Liddy says.

3:14 p.m. Break for an hour! Then they’ll bring out the hot coals.
4:45 p.m. And we’re back. Liddy is talking about the “healthy exchange” he had with Geithner last week in which they discussed how tough this would be for the American public to swallow.
4:46 p.m.Representative David Scott has a metaphor for the AIG scandal: “It’s a stone in our shoe. We can’t run with it. And the American people would like to get the stone out of its shoe.” Nice. Also, over the break they’ve had a chance to think about Liddy’s earlier statement that he’d asked employees to give half the money back, and they’ve decided that’s not quite enough. “Getting half of the money back is not the answer,” says Scott. “The answer is getting all of the money back.”

Liddy says, again, that he thinks the “bulk of the people” will return their bonuses after all this — along with their resignations. “We may not like the outcome of that, sir, when the people are no longer there,” Liddy says. “I’m worried about the $1.6 trillion of exposure.”

4:55 p.m.Liddy stands up for his team again. “I want to say, again. it is really easy to paint everyone with one brush. There are people that work on derivatives, and in FP (Financial Products), and then there are the people who worked on CDS. They are different groups of people. And it’s the Credit Default Swap people, they’re the ones who brought this company to their knees. And the derivatives people are getting tarred and feathered like everyone else.”
5 p.m. AIG is “not like WorldCom or Enron,” for the record.
5:03 p.m. A southern rep whose name we forget asks, again, why AIG gave people retention bonuses who then left the company. Liddy says, again, that they gave the bonuses to people who had been asked to wind down books, they were asked do a task in a certain amount of time and to certain specifications, and when they completed it, they received the bonuses.
5:08 p.m. Representative Maloney just forgot what she was saying for a minute.
5:22 p.m. Déjà vu. Representative Moore has him again defining the difference between a retention bonus and a performance bonus. She almost says that the Financial Products division was in “deep shit,” but changes it to “decline” at the last minute.
5:27 p.m. Responding to a question from Representative Michelle Bachman, Liddy says he thinks it will take them about four years to wind down the Financial Products business, if they’re lucky. He adds that the AIG name is “so thoroughly wounded” that he expects they will change it. Can we suggest they don’t call it “I Can’t Believe It’s Not Insurance”?
5:35 p.m. Winding down the credit-default-swap business cost $50 billion.
5:40 p.m.Representative Joe Donnelly is relishing saying “naked credit default swap” a little too much. He informs Liddy that he should pay the government back its money. It must be hard to go near the end like this.
“You and I are in violent agreement,” Liddy says.
5:45 p.m. A female rep whose name we forget calls Liddy “a knight on the white horse … and that’s not a reference to the color of your hair.” Really? Liddy says it doesn’t feel that way all the time. Aw.
6 p.m. A rep from Michigan asks how it was possible that the fate of the U.S. economy was in the hands of “100, 200 people”. Liddy replies that actually, there were only 20 to 25 people running the credit-default-swap business, and that he needs to get “Cassano, and the people that ran AIG before my arrival, and ask them.” Awesome.

And with that, we’re out, because it has been eight hours and if we hear another congressman ask why AIG would pay someone a bonus when they hadn’t performed well, we may do like Grassley said and commit hara-kiri. Our final thought is that Liddy did damn well. He kept his cool, he explained things well and in human language, and he gave a lot of shout-outs that ought to make the folks back at the office feel good. He is a gentleman, and we wish him the best of luck with his thankless task.

Live-Blogging the AIG Bonus Hearing