The time line, in the end, may be what matters the most.
In TIME magazine’s cover story this week, Bill Saporito notes that at least one congressman, Maryland Democrat Elijah Cummings, knew about the pending bonuses to AIG’s Financial Products division on Jan. 15, after a meeting with AIG head Ed Liddy. Saporito also notes that Bloomberg News reported on the bonuses on January 27.
TIME’s Massimo Calabresi has reported that Treasury was first alerted by the New York Federal Reserve to the impending bonus awards on February 28, in a note that warned of the possibility of public relations problems. Today, the New York Times reports that Treasury Secretary Tim Geithner was asked about the bonuses in an open hearing, on March 3, by Rep. Joseph Crowley, a New York Democrat. Geithner even answered the question, saying that compensation was “out of whack” and that he intended to do something about it. (UPDATE: To see this exchange, C-Span has the video here.) And yet, Geither says that he only learned about the AIG FP bonuses on March 10. The White House says it only learned about the bonuses on March 12.
Somewhere along the line, communications broke down. And that may be the most concerning part about this entire uproar. It is not clear what White House officials could have done if it had known earlier, since the bonus contracts were protected by law and written in April of 2008, long before the federal government effectively took over AIG. But few in Congress or in the administration doubt that they senior leaders of the government should have known this was coming. At minimum, if the information had been acted on when it became public, taxpayers would not have been blindsided, only after the bonuses had been paid out, by the news of the payments. At maximum, some repayment agreement could have been worked out either in the Stimulus Bill or in advance of the latest grant of about $30 billion to AIG, saving everyone a lot of grief.
The Treasury maintains that the information was just never passed up the chain of command. Geithner, who is quite literally in charge of stitching most of the world back together, did not seem to have time to notice what was about to happen, even if he had already answered a question about the bonuses. If there is a lesson here, this would seem to be it: It’s much harder to lead a nation out of crisis, when you can’t see what is coming around the corner.