American Credit Cleanup Plan

Floor Speech

AMERICAN CREDIT CLEANUP PLAN -- (Senate - March 17, 2009)

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Ms. KLOBUCHAR. Mr. President, in the past few days, we have learned that the American International Group--known as AIG--has awarded $165 million in bonuses to its high-end employees--the employees of its Financial Products group. These are people responsible for the fancy wheeling and dealing that nearly destroyed the company and wreaked havoc on our entire financial system.

The American public is outraged by the arrogance and the abuse of taxpayer funds, and so am I. I was just in my State, where there are people barely holding onto their homes, people who have had their hours cut, and who are just one step away from their home going into foreclosure or from losing their car, and now we learn this today.

Last year, under desperate but necessary circumstances, the U.S. Government had to rescue AIG from total collapse. This was done not to rescue the company itself but to rescue our financial system. AIG would not even continue to exist today except for the infusion of $170 billion in taxpayer funds. The American people now own essentially 80 percent of the company, and AIG is supposed to be doing everything possible to right itself. Well, they haven't.

There is no rational way to justify these bonuses to people who have caused untold damage to our economy. This is not pay for performance, it is pay for failure, which makes no sense at all. Why should they get the golden parachutes when their company and our financial system have been crashing to the ground? The bonuses these individuals are receiving for their failure is more than most Americans make in a lifetime. The American people simply should not be in the position of rewarding the failure of high-flying Wall Street bankers who brought their company and our economy crashing down.

That is why I have joined today with Senator Schumer and other colleagues in writing to Edward Liddy, the chairman and CEO of AIG. We are telling him if these bonus contracts are not renegotiated immediately, we will offer legislation that will have the effect of making American taxpayers whole. AIG needs to step up and do the right thing. But if AIG doesn't take action on its own to correct this outrage, we stand ready to take the difficult but necessary step of enacting legislation that would allow the Government to recoup these bonus payments through the Tax Code.

If we are forced to do this, we will impose a steep tax, possibly as high as 91 percent, that would, in effect, recover nearly all the bonus money. Now, I am like most Americans; I don't like to see taxes raised. But in this instance, I think all of us can make an exception. If they refuse to do the right thing, then it is only fair to impose this kind of tax against the people who have done such great harm to our financial system. They can't walk away with millions of dollars.

They may be laughing all the way to the bank right now, but if AIG can't or won't fix this problem, these people will soon be crying all the way to the tax office. These people seem to think they can operate with a height of arrogance and irresponsibility. This is not just a business outrage, it is a moral outrage.

I am also concerned that in addition to the bonuses already handed out, AIG has plans to spend an additional $450 million in bonuses over the next 2 years. Based on what we know now, can we trust that these bonus payments go to the people who deserve it--the people who fix the problems rather than people who just make the problems?

AIG is set to go into the history books as a company that symbolizes the type of greed and recklessness that has weakened our economy. Where I come from, we reward those who work hard and play by the rules and we take responsibility when we screw up. I believe the administration and Congress should do everything in their power to block these payments and demand accountability.

Now, we know this is also an insult to the many good, strong, healthy financial institutions across this country--the small banks such as those we have in Minnesota; healthy financial institutions that didn't engage in these high-flying dealings that shouldn't be punished. Their stockholders shouldn't be punished because of what companies such as AIG did.

As a prosecutor for 8 years, I dealt with criminals all the time. I have to say the white-collar crooks were often the worst to deal with because they claimed their crimes were an honest mistake and that there weren't any victims. As far as I am concerned, it didn't matter if someone stole with a crowbar or a computer or that they committed their crimes in a nice office or out on the streets, they need to be held accountable under the law.

Time will tell, and the Justice Department and other prosecutors and police will sort this financial wreck out to see when and where crimes were committed, but it is clear that what we need is accountability. If AIG's leadership won't demand it, we will.

Mr. President, I yield the floor.

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