Treasury’s AIG Gag Order
posted by Lawrence Cunningham
Top business executives in the United States regularly contact Members of Congress to lobby on legislation and other matters of public policy. But since the September 2008 government takeover of AIG, executives of that company have been forbidden to do so, unless they first get the Treasury Department’s permission, and the Treasury Department refuses to grant it.
Since AIG executives are afraid to speak out, disclosure of this un-American provision was left to Maurice (“Hank”) Greenberg, former chair and until 2008 the largest shareholder of AIG. He disclosed it yesterday on CNBC.
This is yet another example of the dubious tactics used in Sept. 2008 by Hank Paulson and Tim Geithner when they wrested control of AIG for the U.S. government. Besides having scant legal authority for their takeover actions, the successive Treasury Secretaries tried to keep from the public how the government funds injected into AIG did not support it or its shareholders or employees but were funneled as a backdoor bailout of Goldman Sachs and other Wall Street firms.
It is thus par for the course—but equally outrageous—that we now learn that when Paulson and Geithner imposed this straightjacket on AIG, they also made the company (a) adopt a policy suspending all lobbying and then (b) sign a loan agreement prohibiting it from changing that policy without Treasury’s consent—which apparently may be withheld for any reason or no reason.
Mr. Greenberg, who had run AIG for 40 years and lost his personal fortune of $2 billion to the government takeover by Paulson and Geithner, said of this gag order on MNBC yesterday: “It’s incredible. It’s hard for me to believe it happens in America, where you first impose terms on the company by making them a bridge loan, at usurious rates, and then say to the company you can’t lobby any member of Congress to bring about any kind of change whatsoever.” (MNBC Interview, at about 3:50 / 8:26.)
The audacity of Treasury’s original inclusion of these provisions may only be outmatched by its current strict interpretation and stubborn stance. I understand that the Treasury has told AIG’s management that the lobbying policy (excerpted below) prohibits AIG from talking to Members of Congress regarding the terms of the government’s AIG bailout. Apparently the Treasury contends that any such discussions would be lobbying for legislation!
Heated discussions between AIG management and Treasury are ongoing. If this upsets you, call your Member of Congress!
AIG Lobbying Policy: ”All federal lobbying activities by AIG or its representatives related to advocacy on legislation, as well as political contributions on behalf of AIG, and including the operation of AIG’s political action committee, are suspended.”
Section 6.04(e) of the Treasury-AIG Recapitalization Agreement: ”Restrictions on Lobbying. AIG shall continue to maintain and implement its comprehensive written policy on lobbying, governmental ethics and political activity and distribute such policy to all AIG employees and lobbying firms involved in any such activity. Any material amendments to such policy shall require the prior written consent of the UST and any material deviations from such policy, whether in contravention thereof or pursuant to waivers provided for thereunder, shall promptly be reported to the UST. . . .”