AIG Disgrace: Geithner and Cuomo

Not to beat a dead horse, but the WSJ nails it in its examination of the real disgraces of the AIG bonus affair. For all those who think the bonus recipients were the same ones who created the CDS problems, think again.

As AIG chief Ed Liddy explained on the Hill last week, the people receiving retention bonuses were not the same people who launched AIG's unhedged housing bets that brought the company down. Those people were gone. Their pay is already being clawed back.

Those who remained had been asked a year ago to stay and work themselves out of a job. In accepting the terms offered to them, they committed no offense (say, failing to pay taxes)...Had the company submitted to Chapter 11 rather than a government takeover, a bankruptcy judge might well have authorized identical incentives to minimize losses and maximize recovery for legitimate stakeholders.

It's clear that in addition to being a tax cheat and an incompetent secretary, Geithner is an outright liar, having known about the same bonuses since last year (as had Andrew Cuomo).

As far back as October, New York Attorney General Andrew Cuomo had summoned the Treasury-appointed Mr. Liddy to hammer out a deal on AIG's pay practices. Said Mr. Cuomo in a statement afterward: "These actions are not intended to jeopardize the hard-earned compensation of the vast majority of AIG's employees, including retention and severance arrangements, who are essential to rebuilding AIG and the economy of New York."

On March 3, Mr. Geithner himself was quizzed during a congressional hearing in detail about the AIGFP retention plan by Democratic Rep. Joe Crowley -- a week before Mr. Geithner now says he heard of the plan.

If justice existed, Geithner and Cuomo should both be fired. But as the WSJ notes, Cuomo at least served a useful purpose:

Mr. Cuomo is a thug, but at least he reminds us: It can happen here.