AIG fallout burnishes some, taints others

After a week of talk over controversial bonuses handed out to executives at AIG, those on the winning and losing end of the political fallout are either licking their chops or licking their wounds while wondering how long bonuses will dominate the news.

An eclectic group of winners may be hoping that bonuses at AIG and other companies stay in the headlines after showing their political potency last week.

Perhaps the foremost beneficiaries are two Republican, would-be lawmakers who have targeted their opponents over the bonuses, and House Speaker Nancy Pelosi, who seized on the AIG news and shifted the focus away from the House.

Not so lucky last week were Charlie Rangel, Chris Dodd, Timothy Geithner, and outraged Republican leaders who split on the hefty taxation of bonuses.

Republicans were able to challenge Democrat Scott Murphy, running in the special election to fill Sen. Kirsten Gillibrand’s (D-N.Y.) former House seat, for having supported the final version of the stimulus package – which included the loophole AIG exploited to award its bonuses.

With the competitive March 31 special election just over a week away, Republican candidate James Tedisco and the National Republican Congressional Committee (NRCC) were able to pounce on the issue, with Tedisco calling on Treasury Secretary Timothy Geithner to resign.

Similarly, as a Senate challenge looms, former Connecticut Rep. Rob Simmons (R) was able to ramp up attacks on Dodd (D) for having allegedly help craft the loophole in the stimulus legislation.

“Where’s the transparency in all of this?” Simmons said Thursday. “The issue of executive compensation is obviously an important issue…you would think someone’s reading the language of the bill.”

But while the GOP candidates may have been winners, their potential colleagues face a mixed report card.

Republicans as a whole were able to flex their opposition party muscles, having vocally criticized the Obama administration and Geithner for having been slow to act or negligent on the bonuses. At least five Republican lawmakers – Reps. Connie Mack (Fla.) and Darrell Issa (Calif.) and Sens. Jim Bunning (Ky.), Johnny Isakson (Ga.), and Jim DeMint (S.C.) – called for Geithner’s resignation, while others openly mused how long the Treasury secretary would last.

But Republican leaders in the House were less successful in getting on the same page. While expressing outrage toward the bonuses, Minority Leader John Boehner (Ohio), Conference Chairman Mike Pence (Ind.), and Policy Committee Chairman Thaddeus McCotter (Mich.) all voted against the 90 percent surtax on bonuses. Minority Whip Eric Cantor (Va.) voted for the tax, but only after having been coy about his intention before the vote. The whole party, meanwhile, was almost evenly split on the tax…

… House Ways and Means Chairman Rangel (D-N.Y.) was not so lucky. Having already come under scrutiny for his role in securing a tax break for AIG while asking the company for donations to a building in Rangel’s honor, the reemergence of AIG as Public Enemy No. 1 was hardly helpful. Rangel defensively answered questions about his bill to tax AIG bonuses during a Thursday interview on CNBC, and faced yet another critical article on the subject in his hometown New York Times this weekend.

On the Senate side, Dodd was forced to answer a barrage of questions about his role in creating the bonus loophole. At first denying responsibility for the provision, and then pivoting to say the Treasury Department had requested its inclusion, Dodd has become a top target of not just his 2010 opponent Simmons, but Republicans nationwide. Along with Dodd’s numerous donations from AIG and troubling poll numbers, a series of critical headlines were hardly a boon to the Banking Committee chairman.

And perhaps no other figure in Washington faced more heat last week than Geithner. With lawmakers beginning to call for his resignation, and allegations from Dodd that his department was responsible for the loophole, Geithner has found himself with his feet to the fire after less than two months on the job.

For President Obama, Geithner’s struggles have carried over to him. The president had to answer questions not only about his stimulus package’s inclusion of the bonus loophole, but also constant questions about his confidence in his Treasury secretary.

But if there is one clear loser in the past week, it would be the different companies receiving assistance under the Troubled Asset Relief Program (TARP). Between new rules expected to be announced this week by the Obama administration governing executive pay, the conflagration over AIG put companies on notice that misuse of their financial assistance will now be met quickly and publicly with repercussions in the form of new taxes, regulations, or otherwise.

There is no CEO more acutely aware of that lesson after last week than AIG’s chief executive, Edward Liddy. As the public face of the unpopular company, Liddy was dragged to Capitol Hill and sometimes savaged by the media for his company’s bonuses.

Liddy, though, is also a winner. While testifying before a hostile Congress is no enviable task, Liddy managed to calm many lawmakers and didn’t stoke the public ire against his company much more…

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