AIG bonuses test a truce between senators

By Lisa Mascaro

Saturday, March 21, 2009 | 2 a.m.

As Nevada’s three House members joined in voting to impose steep taxes on bonuses for employees of AIG and other firms receiving taxpayer bailout funding, another argument is playing out between Nevada’s two senators.

Republican Sen. John Ensign is leading his party in pressing for a full-scale who-knew-what-when investigation over the AIG loophole.

After being criticized throughout the Bush administration for failing to give proper congressional oversight of the Iraq war and other issues, Republicans are now robustly engaged in asserting a role for Congress. They are displaying their Clinton-era enthusiasm for investigating a new administration.

“Some serious questions need to be asked and deserve answers,” Ensign said. “Part of our job is to do oversight.”

Ensign’s stridency on the issue has Nevada’s two senators shadowboxing again, withholding direct public criticism of one another as part of their nonaggression pact.

Senate Majority Leader Harry Reid said legislation to fix the AIG mess can be quickly passed if Republicans don’t block the way. He dismisses the Republican Party as operating “in reverse.”

But Reid has repeatedly refused to answer questions about the loophole.

“I not only don’t want to talk in the rearview mirror, I’m not going to,” Reid said when pressed by reporters this week.

“We caught the AIG thing in time we can do something about it,” Reid said. “We have to start focusing on the future, not trying to relive what has already been done.”

The AIG bonuses consumed Washington this week. Lawmakers in both chambers trekked to the floor to express their outrage, Nevadans included.

“I find it insulting that the CEO of AIG said that his decision to give out these bonuses was ‘difficult,’ ” Democratic Rep. Dina Titus said. “ ‘Difficult’ is trying to figure out how to keep a roof over your head when you’ve lost your job.”

Despite Congress’ attempts to ban exorbitant executive pay in the rescue packages, language in the economic recovery package was altered allowing AIG to pay $165 million in bonuses that had been arranged late last year for employees who stayed on during the restructuring.

Yet the sudden outrage over the payments is also raising some eyebrows because the bonuses have been long known — even Ensign cites references in November to news stories as the Bush administration first arranged the company’s bailout.

Connecticut Democratic Sen. Christopher Dodd, chairman of the Senate Banking Committee, has been singled out for scorn. In February, he revised legislation intended to limit executive compensation so that it exempted bonuses arranged under prior contracts.

Dodd said the Treasury Department had requested the change and that he did not know that it would allow the bonuses at AIG. The insurance giant is a big contributor to Dodd, and many AIG employees live in his state.

Reid also has become a target. The Senate Republican Campaign Committee posted an advertisement on the Web on Friday that claims Reid was “in the room” when a deal was cut to give the bonuses.

Reid had overseen negotiations throughout the talks over the economic recovery package, which is when Dodd inserted the exemption for contractual bonuses. But Reid was not in the room at the time of the revision, according to a Democratic source with knowledge of the situation.

Reid’s spokesman dismissed the Republican attack as “the height of hypocrisy.”

AIG has also given contributions to others in Washington, including Bush and President Barack Obama. Ensign ranks among the top 15 members of Congress receiving the most money from AIG, according to the Center for Responsive Politics. Reid is not among the top recipients.

Treasury officials have said they allowed the AIG bonuses because they believed the company was contractually bound to make the payments. Even now, Ensign and others question the legality of imposing steep taxes as a way to recover most of the money.

The House would impose a 90 percent tax on the bonuses as a way to recoup the money. Titus, Democratic Rep. Shelley Berkley and Republican Rep. Dean Heller voted for the tax.

The Senate expects to take up similar legislation next week — though Republicans blocked the bill from advancing late Thursday, saying they need more time for debate.