Press Conference with Senator Jon Kyl (R-AZ); Senator Lamar Alexander (R-TN); Senator John Ensign (R-NV); Senator John Cornyn (R-TX)

Press Conference

PRESS CONFERENCE WITH SENATOR JON KYL (R-AZ); SENATOR LAMAR ALEXANDER (R-TN); SENATOR JOHN ENSIGN (R-NV); SENATOR JOHN CORNYN (R-TX)

SUBJECT: AIG BONUSES

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SEN. KYL: Well, you can't make this up. We have a real problem in this country. And the administration needs to get serious about solving it. They seem to be distracted about doing a lot of other things and not focusing on the problem in front of us, which is the problem of our financial institutions and the problem of restoring credit in America.

Congress has given the administration a lot of authority and a lot of taxpayer money to try to resolve this situation, and it does not appear that the administration has figured out what to do, how to control it and how to manage the taxpayer money in a way that it doesn't get misspent.

Everybody's upset about these AIG bonuses, everybody. I suggest that what we'd ought to focus on, however, right now is how it was possible that these bonuses were paid, because as it now turns out -- and thanks to the digging of a lot of folks in the media over the course of the last 36 hours or so -- the story is becoming a little bit clearer about exactly what happened. But until we understand what happened -- I think until the administration understands what happened, it's not going to be able to figure out how to deal with these hundreds of billions of taxpayer dollars in a way that's acceptable to the taxpayers and that helps to resolve the situation.

You have the president saying that he takes full responsibility and then saying that it wasn't his fault. You have the chairman of the Banking Committee saying, well, he didn't put this language in the bill and then saying, well, he did, but it was because somebody made him do it. And last night I saw an interview in which he said it would have been a whole lot worse, these people said, whoever they are, if he hadn't accepted the language that he accepted.

The language, of course, that we're talking about is the language in the American Recovery and Reinvestment Act, the so-called stimulus bill, that provided an exception for contractually obligated bonuses agreed to -- agreed on before February 11th, 2009, which is the provision that exempts the AIG bonuses.

There was much stronger language in the bill when it passed out of the Senate, but somehow or other in the conference committee, and no one appears to know exactly how, that language was changed. The chairman of the Banking Committee acknowledged that he's the one that did it, because somebody told him to. And a question I have for all of you in the media is, help us find out who that was. Was it Treasury? Was it somebody from the White House? Everybody in the administration seems to be pointing fingers at each other. Now Time magazine appears to have uncovered the facts that Fed had told Treasury about this; Treasury, therefore, did know about it.

And the other question that a lot of us have is, when the AIG restructuring was accomplished a couple of weeks ago and $30 billion was provided for AIG, why wasn't that the opportunity to renegotiate these contracts, which they apparently knew existed at that time?

These are the kind of things you need to know in order to ensure that they don't happen again and that, as I said, you can manage taxpayer dollars in a sensible way. And it is among the questions that we're asking here this morning.

A final point I'll make, and then I'll turn to my -- well, let me make two quick points here. This administration has talked a lot about transparency. I suspect that some of you, if not members of Congress, would have found, if in fact this had been on the -- the bill had been on the website for (sic) five days, as the Obama administration promised would be the case, if we really had the kind of transparency with all of this taxpayer money that the Obama administration has liked to brag about, then maybe somebody would have found this out. But since that didn't happen, it remained buried and nobody realized that these AIG bonuses were permitted under the language that somebody in the administration insisted to the chairman of the Banking Committee that he put in the legislation.

We've got a crisis on our hands. The president is correct about that. He flies off to Los Angeles tonight to be on the Jay Leno show.

My suggestion is that he come back -- since he's taken the full responsibility -- to get his people together and say, "All right, I want to know exactly what happened; who did what, when; and how are we going to prevent this from ever happening in the future; and how can we manage these taxpayer assets in a way to solve the banking and financial institution crisis that's facing this country? Let's get this resolved, or the American people are going to have no confidence in our administration."

SEN. ALEXANDER: We have an impressive new president who has conclusively proven that he can do a lot of things at once: hold a health care summit, which I was privileged to attend; make a good education speech, with which I agreed. He's overruled some of President Bush's actions; he's been to a wind turbine factory; he's in California tonight.

But the AIG bonuses make the president subject to the charge that he's living above the store, but not minding it. He's even found time to fill out his NCAA basketball brackets -- which is a healthy thing to do, in my opinion -- but he picked North Carolina, and he caused the Duke coach, our Olympic coach, "Coach K," to say, respectfully: You might be spending less time on the brackets, Mr. President, and more time on the economy. I think that's what we'd like to say, with respect.

This country has one big problem. It is the economy. There is one person in the country who can fix the banks and get the credit flowing again. That is the president of the United States. When President Eisenhower was faced with this, he said, "I shall go to Korea." He was there within three weeks, and the country believed it, and he ended the Korean War.

I don't -- all of us believe, I think, that if President Obama were to focus his attention on the economy and getting credit flowing again and fixing the banks, that he could wear everybody else out, he could get it done, and he could get us moving again. And then we can go to the other issues.

So perhaps the AIG bonuses is a reminder, respectfully, it's the economy, Mr. President. We need for you to say, "I will fix the banks, I will get credit flowing again," and to focus your attention on these problems so incidents like the bonuses don't happen again.

SEN. KYL: Make a couple of points. First of all, you know, the question is going to be asked, you know, why are we focusing on this? You know, the bottom line is, is that there's going to be more taxpayer money going out. And we have to get to the bottom of this, to make sure that this doesn't happen again.

Why weren't the proper questions asked? Why, when according to the news services, the articles were out there that these bonuses were going to be paid -- this happened, this was in the public press back in November, on November 26th. Then our secretary of Treasury gets up and says he didn't know about it until last week. Well, we have to ask, first of all, is his staff that incompetent not to let him know, or is he not telling the truth? And we don't know that. That's one of the reasons I've said, you know, the various committees, especially the Senate Finance Committee, should be focusing on what caused this in the first place.

The House of Representatives is voting on a bill, you know, to address the AIG bonuses.

One of the things that thing doesn't address is the $20 billion that went to overseas banks. That's a lot bigger number than the 165 million that went to bonuses. And nothing that they're doing is going to fix that.

If these -- if we don't figure out what happened now, how do we fix or how do we prevent it from happening in the future? And maybe there are other instances that have happened? And so before we, you know, try to fix just the AIG bonuses, let's find out what happened, so that if there is a fix that we can all agree on, we can agree to fix all of this situation and not just this one isolated maybe -- which may not just be an isolated incident with AIG.

That's what we're asking for. That's why it is important that this administration come clean, that the people who are involved, in the Senate conference committee, they come clean, so we can figure out what's going on here and prevent any kind of this activity from going on in the future. And you know, the one thing that, I think, has to be emphasized is that when one party rules and shuts the other party out, things like this can happen.

There were no Republicans in the room when that February 11th date was put in, inserted, not a single Republican in the room, looking out and maybe asking the questions. If Republicans were in the room, that question could have been asked. And we may have been able to prevent this from happening in the first place. But when the Democrats shut us out of the process, in supposedly this new bipartisan Congress, these kinds of things can happen.

SEN. CORNYN: There's a difference between campaigning for office and governing. But since being elected, this president and his administration appear to be engaged in a permanent campaign and seem to disdain or at least have very little time for the hard work of governing. And that's really what we're talking about here.

We stand ready to work, with this president and his administration, to achieve some of his stated goals. For example, I was encouraged to hear him say that transparency was important, because it created the kind of accountability that would then help the American people regain their lost confidence in their elected representatives and their government.

And this stated goal of putting legislation on the Internet, for five days or more, to let people know what's in it, let the American people, not just the members of Congress, know what's in it, before we vote on it, I thought, that was a real good idea. But we seen an increasingly -- increasing disconnect between saying one thing and doing another. And the list is almost too long to recount here.

But when you get legislation that was circulated at 11:00 on a Thursday night, more than 1,000 pages long, spends more than a trillion dollars, including the interest on the debt, and you're required to vote less than 24 hours later, these are the kinds of mistakes. These are the kinds of things that get slipped in surreptitiously now that no one claims to know how it got there and no one claims to be responsible for.

These are the kinds of things that happen.

So really what we're asking the president and his administration to do is work with us in the serious business of governing; be consistent with your stated ideals for transparency and accountability. And together hopefully we can -- the American people will regain confidence.

What's been squandered by this incident is the public's confidence. It really doesn't look like the administration knows what it's doing. And that's why I agree it's extraordinarily important to find out what happened and when it happened, because you have people once again saying one thing and doing another.

The president graciously has said, "You know what? The buck stops with me." But I have to say, that's not a good enough answer. We have to know what happened, why it happened, so it won't happen again.

SEN. KYL: Any questions?

Q Is it fair for you all to say that Republicans were shut out of the conference committee and possibly could have kept this loophole being added when I don't think that any of you voted for the stimulus? So --

SEN. KYL: One reason that we didn't vote for it is because we didn't help to craft it. And I think Charles Grassley yesterday -- I won't quote the whole -- you probably heard what he had to say about having been shut out. And he is absolutely correct about that. But being named as a conferee, as he said, meant that you were invited to the final formal meeting late on February 11th when the conference report was announced. And they had no input whatsoever.

We opposed it for a whole lot of reasons. We might have had had more support for it, had we had more input into it.

SEN. ALEXANDER: But Jon, we've never had a tradition in the Senate of only inviting to the conference senators who voted for a bill.

SEN. KYL: Yeah.

SEN. ALEXANDER: This is the United States Senate, in which we all participate. And this is -- that's never been the case here. I mean, this is -- we -- I don't know whether we would have caught that. But more eyes on the subject over several days might very well have caught that. And it's exactly what can happen when one party runs roughshod over the other party.

Q Don't you bear some responsibility for at least finding this in the bill? You have staff. You have -- (off mike) -- responsibility to read the legislation before you vote on it. Why don't you have some responsibility to have found this provision?

SEN. CORNYN: I would say absolutely not. We would have liked to have been able to discharge our responsibility, to read the legislation and know what's in it to vote on it, but the majority leader made sure that was impossible.

Q But the bill was before you before you before you -- (off mike) --

SEN. KYL: Not this language.

SEN. CORNYN: Not this language. This was the conference committee language, which wasn't released in writing till 11:00 on a Thursday night, and the vote we had on Friday less than 24 hours later.

Q Not to be argumentative, but you have a staff. You have yourselves. People -- the public wants to -- the public doesn't understand --

SEN. CORNYN: Well, not to be argumentative -- not to be argumentative, but it's physically impossible to go, with the kind of detail that is necessary, through a very complex bill that spends in excess of a trillion dollars and know everything that's in it.

I mean, here we are after the fact with this language interjected into the conference report, apparently, protecting these bonuses earned before February the 11th, and we can't even find out who was responsible now and what happened. I mean -- so I don't think it was physically possible to do it.

SEN. ENSIGN: Let me make (one ?) comment on that. There's a difference between being able to read a bill and being able to study a bill, okay? My staff actually read the entire bill -- between myself and my staff, we read the entire bill. That's a difference. It's like reading a book and studying a book, okay? This is something we should have studied in detail.

That's one of the reasons that people have talked about the five days being on the Internet. So it's not just our eyes. It's the public eyes. It's people -- there's more and more people that could have looked at this thing and possibly determined, "Geez, that -- this could be a problem." And that's one of the reasons they -- remember, they set a false deadline. They set an absolutely false deadline that this bill had to be done by. And that false deadline is what created this problem. There wasn't anything that if we didn't do that bill on that date that it was going to fall off the cliff. It was a false deadline set up by the Democrats.

Q Senator Ensign and Senator Kyl, there's been -- (off mike) -- talk about in one party's rules and one party's rule for several cycles in this town. And under that one party rule, when you had that -- (off mike) -- very similar to this -- (off mike) -- earmarks -- (off mike) -- question in 2004 where there was a provision where members of Congress -- (off mike) -- tax returns -- (off mike). I mean, isn't this a case study in what happened previously when the Republicans were in charge of (all this ?)?

SEN. ENSIGN: Well, you know, when we were in charge -- you look at -- several (incidences ?) that we did in a very bipartisan way. As a matter of fact, Democrats still criticize this -- you look at No Child Left Behind. I wasn't even -- I was on the conference committee. That was VERY much of a bipartisan -- that was, you know, Ted Kennedy, John Boehner, at the time. I mean, there was -- and a lot of other people who were involved in that. They -- Medicare Part D was completely bipartisan -- open conference, amendments, and when the final things were written.

Bill after bill after bill, you know, when we were in charge, was done in a bipartisan fashion, especially when they were critical bills.

This is a trillion-dollar bill where one party shut out the other party. There were minor bills here and there that might have happened in the past -- okay, you know, each party might have done that. But not when you're talking about critical -- critically important legislation. That just didn't happen.

SEN. KYL: Let me make one other point. I am aware of some times when Republicans conducted conference work without Democrats. What this illustrates is that that's never a good idea.

But there's no equivalency here. Had -- you know, you could read this language and not have any idea what the import of it is. In fact, you almost skip over it. The point is, we weren't in the conference committee where it was discussed. Somebody came in the conference committee -- perhaps it was the chairman of the Banking Committee -- and said we have to change this language because somebody has told me we have to change it, and they've said that if we don't -- if I don't agree to this, it'll be even worse. We weren't there, so we didn't have the background to understand what they were talking about, why this was important, what the implications of it were.

And I still think it's important, since this was all behind closed doors, to ask the question: Who is it that said it would be even worse if they didn't accept this language? And what did they mean by that? Were these people from the Treasury Department? Were they people from the White House? Those are things, I think, that we need to find out.

(Cross talk.)

Q Senator, how do you --

Q Given the nature of Wall Street with bonuses, and given the nature of AIG, with all the problems they've had, I understand you saying you couldn't have read this entire bill -- (off mike) -- did anybody ask a question about it before the vote, that -- does this legislation prevent any of these companies from shelling out bonuses?

SEN. KYL I don't know, but I can tell you what was I thinking just in my mind, and that's all.

SEN. : Yeah.

SEN. KYL: We all -- I was in the very first meeting when Paulson and Bernanke were there and so on, and from the very beginning there was an understanding that there would have to be some limitations imposed by the government on executive compensation, as a general proposition. When that language was for -- I voted for both TARP bills, by the way. So I was not un-supportive of the notion of trying to help here. And there was always an understanding there would be limitations, and I would continuous -- I would on occasion inquire, are there limitations on the executive compensation issue, and was told yes, there are.

When the bill passed the Senate, there was a unanimous provision that specifically dealt with this. I said: Good. That's in there. Okay.

That's the last I hear of it, and then all of this comes out, and we realize that it was changed.

And that's why I'm saying all of us knew that it had to be in there. Why did it get changed like this? I gather it was because there are some absolute contractual obligations, and it's a legitimate question then to ask: Okay, if we don't like those contractual obligations, can we do anything about it?

The point I tried to make in the beginning was, had the people who are administering all of this at Treasury, when they restructured AIG a couple of weeks ago and gave them $30 billion more, knowing that these existed, knowing that this was not a good idea -- had they then said something, it could have been restructured at that time.

You can renegotiate contracts. But it's a little bit late after the money's already been paid out.

STAFF: Guys, one more question.

Q So you're saying that until this question is answered, you're not going to support any effort at (clawing back ?) the money? That seems to be what you're saying.

SEN. KYL: I don't think anybody here said that. No.

Q Okay. So what method do you support --

SEN. KYL: I support holding hearings -- I believe that we've got to hold hearings to find out what happened, find out who else might be in the same situation. For all I know, Fannie and Freddie may be facing the same kind of situation. So if legislation is going to be proposed, who all should it apply to? Can it be written in a broad enough fashion to not, you know, violate the Constitution if you're going to change expectations? Until we have hearings and we understand all of this, we're not going to know what kind of fix to implement, in my view.

STAFF: Guys, thanks very much.

END.

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