US lawmakers readied Thursday to hit AIG fat-cats in the wallet as President Barack Obama's administration battled to defuse a national furor over massive bonuses handed out by the giant insurer.
Lawmakers said the House of Representatives would vote later on a bill to slap a 90-percent surtax on bonuses paid at companies that, like American International Group, have been rescued at US taxpayer expense.
"I expect to see an overwhelming vote which will be an expression of the people's anger and disgust" at corporate bosses rewarding themselves for failure, House Democratic Majority Leader Steny Hoyer said late Wednesday.
Hoyer spoke after a day-long congressional grilling for AIG's government-appointed boss, Edward Liddy, whose call for bonus recipients to repay half the money was derided as too little, too late.
Obama shouldered the blame for the uproar over the "retention bonuses" totaling 165 million dollars, which Liddy said were essential to keep on top staff and traders so as to unwind a high-risk hedge fund operating within AIG.
"Listen, I'll take responsibility. I'm the president," Obama said, sparking cheers and applause at a "town hall" meeting in Costa Mesa, California late Wednesday.
"We didn't draft these contracts. We've got a lot on our plate -- but it is appropriate when you're in charge to make sure that stuff doesn't happen like this.
"So we're going to do everything we can to fix it," the president said, after earlier expressing his "complete confidence" in under-fire Treasury Secretary Timothy Geithner.
AIG was saved from bankruptcy with an 85-billion-dollar government lifeline in September. The bailout has since mushroomed to more than 170 billion dollars, leaving the taxpayer with an 80-percent stake in the company.
The insurance giant was rescued because the US government believed its intricate web of ties with banks worldwide posed an imminent risk of financial collapse not just for the United States but globally.
AIG informed the US Federal Reserve three months ago that it would pay the bonuses on March 15, but the Fed failed to notify Treasury or White House officials for months, The Washington Post reported Thursday.
"I was stunned when I learned how bad this was on Tuesday (March 10)," Geithner told the Post. "I shouldn't have been in that position, but it's my responsibility and I accept that."
Geithner then briefed a senior White House aide, who informed Obama on March 12, the day before they were paid out, the Post reported.
Republicans are scenting blood as Geithner, already under attack for his stop-start initiatives to clean out the US banking industry, is assailed over the AIG saga.
At Wednesday's hearing, Republicans demanded full disclosure of Geithner's involvement with AIG in his previous job as head of the New York Federal Reserve, and House Minority Leader John Boehner said the Treasury chief is "on thin ice."
The embattled AIG chief executive revealed that he was asking executives who received more than 100,000 dollars in bonuses to repay half the amount.
"We've heard the American people loudly and clearly these last few days," he said, while adamant that despite the threat of subpoenas, lurid death threats made it essential to keep the names of the 418 bonus recipients private.
Senior House Democrat Barney Frank said the death threats were "despicable" but kept up a vow to extract the names -- as did New York state Attorney General Andrew Cuomo, who is crusading against Wall Street malfeasance.
Liddy, a former CEO of the Allstate insurance company who took over at AIG after the government rescue deal in September, said the financial products unit blamed for the group's giddy fall from grace would be shut within four years.
He said the unit, whose "credit default swaps" and derivative products helped ignite the global financial crisis, is still sitting on 1.6 trillion dollars in shaky investments that need expertise to unwind.
That argument was unacceptable to lawmakers who gave vent to their constituents' fury over the bonuses at a time when millions of Americans are living in dread of losing their jobs, homes and healthcare.
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