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AIG's Chief Punching Bag Takes the Blows

By Dana Milbank
Thursday, March 19, 2009

Embattled AIG Chairman Edward Liddy was being ordered to name names.

"Send us the names of those who received bonuses who have not given them back," directed Barney Frank (D-Mass.), chairman of the House Financial Services Committee, at a subcommittee's ritual flaying yesterday of the profligate insurance company.

"I will, if I can be absolutely assured that they will remain confidential," bargained Liddy, who fiddled with his pen enough to blister his fingers.

"I won't give you that assurance," Frank said, threatening a subpoena.

The red-faced executive, voicing fear for the "safety of our people," looked down to read samples of death threats received, including: "All the executives and their families should be executed with piano wire around their necks."

"I am not persuaded," Frank said.

It had a whiff of congressional blackmail for AIG's bonus babies: Give back the money or your safety cannot be guaranteed. But, considering the public fury directed at the company this week over the $165 million in bonuses paid by the bailed-out insurer, Liddy might consider himself lucky that the lawmakers didn't take out some piano wire themselves.

They waited for up to eight hours for the chance to vent their rage at Liddy, who, though he's only a dollar-a-year man brought in to rescue the company, signed off on the taxpayer-funded bonuses.

"There's a tidal wave of rage throughout America," announced Gary Ackerman (D-N.Y.). Judy Biggert (R-Ill.) called it a "travesty," Carolyn Maloney (D-N.Y.) found AIG "morally reprehensible," Shelley Moore Capito (R-W.Va.) perceived "an insult," and Paul Hodes (D-N.H.) contributed the words "ridiculous" and "unconscionable."

The lawmakers couldn't quite agree on a solution for AIG; proposals included lawsuits, bankruptcy, tax legislation and fraud prosecution. Neither could they decide who deserved the blame, but it was hard to argue with Spencer Bachus (R-Ala.) when he said, "There's plenty of blame to go around."

One thing they could agree on: their outrage. They traded expressions of this emotion in a sort of mass catharsis.

"I certainly join my constituents in their outrage," submitted Ron Klein (D-Fla.).

"I, like all my friends, are outraged," proffered Charlie Wilson (D-Ohio).

"I'm going to go ahead and say that I'm outraged as well," proposed Randy Neugebauer (R-Tex.).

Seats in the hearing room were the hottest ticket on Capitol Hill this year. Even Terry Moran of "Nightline" had to scrounge for a seat. In the hall outside, CNN was broadcasting live, while crews from Japanese TV and "Inside Edition" were among the 50 cameras awaiting Liddy's arrival.

During the mayhem, Zippy Duvall, president of the Georgia Farm Bureau, happened to be walking down the corridor. "It's Liddy!" somebody called out. Suddenly, Duvall was surrounded by lights, television cameras and microphones. "Do you think they're going to treat you fairly?" somebody shouted.

Duvall, wearing a peanut-print tie, stopped to chat. "If I knew I was going to get all this attention, I'd have gotten my hair cut," said the farm bureau president, who, unlike the white-maned Liddy, is almost completely bald.

Inside the hearing room, things were only slightly more orderly. Representatives of the Code Pink protest movement waved signs at Liddy that read "A.I.G. -- Jail" and "Ain't It Greed." Liddy turned to reason with them: "Before you get too angry, just listen to my answers," he pleaded.

Paul Kanjorski (D-Pa.), the subcommittee chairman conducting the hearing, intervened. "Pink Ladies back there: Respond properly or please exit the room." When the sign-waving persisted, Kanjorski issued an order: "Officers, take the signs!"

Liddy, escorted into the room by a lawyer wearing a neck brace and an arm sling, adopted a suitably unhappy expression when he stood to take the oath. He reminded lawmakers that "six months ago, I came out of retirement to help my country." He also surprised the panel with an announcement that he had asked bonus recipients to "return at least half of those payments."

The disclosure disarmed the lawmakers, who now had to find kinder ways to criticize Liddy.

Ackerman played good cop. "I want to try to help you," he said.

"I need all the help I can get," Liddy replied.

But the help wasn't helpful; the congressman advised Liddy to take the bonus money and "eat it now."

"My fear is the damage is done," Liddy said. "That we will get the bulk of that money back. . . . But they will return it with their resignations."

"I'd just as soon you get rid of them," retorted Michael Capuano (D-Mass.).

Wounded, Liddy told the lawmaker about "people working at AIG very hard for the American taxpayer. . . . You would be proud of them."

"Not right now I'm not," was Capuano's sour reply.

And it got worse from there. Stephen Lynch (D-Mass.) charged AIG officials with "malfeasance," "violation of fiduciary duty," "arrogance" and "probably illegal" behavior.

"Do you have anything to say for yourself?" Lynch asked.

"I take offense, sir, at the use of --"

The congressman cut him off. "Well," Lynch said, "offense was intended, so you take it rightfully."

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