The Obama Administration’s Failure to Prevent the AIG Political Train Wreck

Obama on the public outrage at AIG’s bonuses from bailout money to its incompetent execs: “Oops, there go my people. I must hurry and catch up with them for I am their leader.”

Our leader has a lot of catching up to do. In today’s Huffington Post, Sam Stein, with additional reporting by Arthur Delaney, describes how the White House and congress refused to back legislation that would have prevented AIG’s arrogant misuse of taxpayer funds.

Senator Ron Wyden said on Tuesday that the furor surrounding AIG's bonus payments could have been avoided had the Obama White House and members of Congress simply backed legislation that he and Sen. Olympia Snowe introduced more than a month ago.

In an interview with the Huffington Post, the Oregon Democrat noted that during the crafting of the stimulus package, he and his Republican colleague from Maine introduced a provision that would have forced bailout recipients to cap their bonuses at $100,000. Any amount paid above that would have been taxed at 35 percent. The language made it through the Senate, but during conference committee with the House, it was inexplicably removed.

"The reality is, had that legislation been passed it would have been a very strong disincentive to anybody paying out bonuses in the future," said Wyden. "Earlier, the President had denounced those bonuses that came at the end of the year. And when Senator Snowe and I said it is not enough for those in elected office to say it was wrong, that they have got to have a plan to have them pay it back, we were able to get legislation through the United States Senate. Not a single United States Senator was willing in broad daylight to stand up and oppose our bipartisan amendment... but it died in conference."

Looking back, Wyden laments the missed opportunity, saying that it remains unclear who got the language stripped -- "it didn't die by osmosis." (Feel free to send along tips on who killed the provision.)

Moreover, Wyden says frankly, the Obama administration should have been better prepared to handle what was an inevitable political train wreck.

"I will say that I talked to most of the key members of the Obama team and I was not able to convince them of the value of the amendment that I authored with Senator Snowe," he recalled. "I think it is unfortunate. I think it was an opportunity to send a careful, well-targeted message, which would have communicated how strongly the administration felt about blocking these excessive bonuses. I wasn't able to convince them."

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