Treasury secretary grilled over AIG bonuses
Treasury Secretary Timothy Geithner arrived on Capitol Hill Tuesday to be questioned by members of the House Financial Services Committee on the millions of dollars in bonuses given out at the beleaguered American International Group.
"I share the anger and frustration of the American people not just about the compensation practice at AIG and in other parts of our system, but that our financial system permitted a scale of risk that has caused grave damage to the lives of many Americans," he said.
After getting $170 billion in recovery funds, Geithner was asked whether he was in the room when the bonus discussion occurred. The treasure secretary and Larchmont resident denied prior knowledge of the payouts, but added that the administration should put in place standards that would govern compensation practices.
Federal Reserve Chairman Ben Bernanke, who was also present at the hearing, said it was highly inappropriate for AIG to reward employees in its financial products division after it brought the company down.
"I asked that the AIG payments be stopped but was informed that they were mandated by contracts agreed to before the government's intervention," he said.
Geithner asked Congress for broader powers that would allow the government to prevent another compensation-related scandal from erupting in the future.