Transcription of Senator Grassley's Conference Call with Iowa Reporters


  

     GRASSLEY:  Last night, Senator Baucus and I announced that we

will sponsor legislation discouraging excessive compensation by

companies that take taxpayer's funds as well as recoup payments made

to executives at AIG last weekend and to other executive recipient

institutions of funds from the Troubled Asset Relief Program.

 

     Our legislation will only be needed if the president and treasury

secretary are unable to recoup executive bonuses paid by AIG.  And the

secretary of treasury did write a letter to members of Congress last

night that the government will recover the money by requiring it be

repaid from company operations and deducting the amount from the next

$30 billion in aid being provided to the insurer. 

 

     And, of course, we hope that the administration sticks to this

plan and, in fact, that it is successful.  This could have been

avoided if the original TARP legislation had included strong

provisions to limit executive compensation.  It did not, and I said no

last October -- October the 1st, to be exact when I said so on the

Senate floor. 

 

     Using bailout dollars for bonuses after companies have been run

into the ground is insult to injury against our taxpayers.  I don't

want to dictate how private companies should operate, but these

companies have accepted massive infusions of public dollars, and the

outrage against bonuses is justified.

 

     Kerry Cathcart?

 

     QUESTION:  Thank you.  Senator, I know you voted against Geithner

when he was -- when they nominated him for treasury secretary.  How do

you evaluate his performance?  And would you like to see him either

resign or fired? 

 

     GRASSLEY:  Neither of the latter at this point.  You know, there

might be a time when I would say that, but I don't -- I don't want to

judge a person based upon two months of service to the taxpayers --

less than two months, in his case. 

 

     I think that he's got a lot to learn, and I think we're going to

learn that he made a lot of mistakes and misjudgments when he was

president of the Fed in some of the things he did from that position

that helped Wall Street. 

 

     But those aren't things that are easy to quantify.  They are

impressions.  But let me say an analysis of Geithner by let me give

you analysis of Paulson.  You know, I think that he had a lot of

respect as secretary of treasury and did a lot of things in July

through January that now we're finding out probably were not the

wisest things to do. 

 

     Probably, Geithner was part of that decision making when he was

president of the Fed bank up there.  And you kind of look at Paulson

this way originally, not necessarily now.  For sure, not now. 

 

     And that is you and off of Wall Street making $60 million and you

-- and you've got to know what you're doing.  Well, I think people

respected him in that vein.  And then you look on mistakes that were

made or misjudgments that were made and you and to the conclusion that

people that make $60 million on Wall Street aren't the smartest people

in the world. 

 

     Mike Myers?

     Mike, you aren't coming through.  Mike, I can't hear you. 

 

     QUESTION:  I'm here. 

 

     GRASSLEY:  Yes, I can hear you well now. 

 

     QUESTION:  Oh.  I don't know what the problem was. 

 

     Senator, on your legislation -- sorry I haven't read it.  What

about bonuses that go out -- well, just tell me if somebody is in

subsidiary working in London or some offshore, can you go after that? 

 

     GRASSLEY:  No.  No.  If it's -- we can't go after that from the

individual, but we can go after it with a larger amount from the

company. 

 

     QUESTION:  Larger amount, meaning? 

 

     GRASSLEY:  The 35 percent that that guy would have gotten in

bonus, we'll take it out of corporate money by increasing the tax on

corporations. 

 

     QUESTION:  OK.  Second question, if I may, are you supporting --

are you part of this effort by Chairman Baucus to kind of really tweak

the Geithner over the trade issue with Cuba on restrictions on -- I

think he's trying to ease this policy where they have to have cash up

front before anything agriculture, et cetera, products they buy? 

 

     GRASSLEY:  If you asked me -- if you asked me if I signed that

letter, I did not sign it. 

 

     QUESTION:  Were you asked to?  Or did you decline to? 

 

     GRASSLEY:  I don't know whether I was asked.  I can have Jill

find out and get back to you. 

 

     QUESTION:  Do you support the thrust of the letter?  The policy?

What he's doing? 

 

     GRASSLEY:  I believe that it's -- of course, it would -- I think

it's -- if it -- if it doesn't expand trade with Cuba, if it's limited

to food and medicine, I believe our relationships with Cuba and how

you pay for that shouldn't be any different than with any other

country. 

 

     QUESTION:  OK.  Thank you. 

 

     GRASSLEY:  OK.  Let's see.  Mike Glover?

 

     QUESTION:  Do you think your comments and actions over the last

few days reflect the American mood about this whole AIG thing? 

 

     GRASSLEY:  Except if you took me seriously that I wanted the

people to actually kill themselves -- and I hope you didn't because,

you know, it was rhetoric to make a point -- then I think the American

people agree with me. 

     I think that -- well, I think they'd go even further.  And I get

the opinion from talking to my -- some of my constituents that anybody

that's chairman of any of these companies that are getting federal

help and, before that, driving their company into the ground, that

they -- that they are guilty of some crime and that they ought to be

behind bars. 

 

     But the very least, they feel that they shouldn't be in the

position of CEO.  And for sure, that if they -- if they guilty of

something, they ought to be in jail.  And I hope I'm confident enough

to remind people that you're innocent until proven guilty.  But I do

go on to tell people that, at one time last fall, 28 of these

financial institutions were being investigated by the FBI. 

 

     Now, I don't know the outcome of those investigations, but I'm

confident that if the FBI found somebody committing fraud that they'll

be prosecuted.  And maybe there are people being prosecuted right now,

but I don't have that in my memory. 

 

 

     QUESTION:  So you sense a real sense of outrage out there? 

 

     GRASSLEY:  Yes.  I'll bet if I walked down the street of Des

Moines and talked to people, I'd hear it right there in Des Moines

where you are. 

 

     QUESTION:  OK.  Thank you. 

 

     GRASSLEY:  Joe Morton?

 

     QUESTION:  Yes.  Senator, with the AIG chief, Liddy, coming up to

the Hill today, in the context of your earlier comments about wanting

to see some contrition on the part of these executives, what do you

think he needs to do in that committee hearing, and what kind of

reception do you think he'll get? 

 

     GRASSLEY:  Well, he's not necessarily the one that I should be

implying my remarks from because, you know, he's making $1 an hour and

he was put in his position by government.  But people before him and

people with other financial institutions, just an acknowledgement that

they made bad decisions, and their bad positions have brought down the

company and/or requiring federal help would go a long ways towards

satisfying me. 

 

     You know, I suppose I'm a little bit exaggerated when I say go

before television and take a big bow, as the Japanese do.  But it does

illustrate a difference in culture between the corporate culture of

Japan and the corporate culture of America.  Since I first made that

statement in October about suicide -- and that was October the first

-- and my staff reminds me I even said it on the floor of the United

States Senate back then. 

 

     Regardless, you have not heard the CEO say I'm sorry and admit

that I made bad decisions and that I'm responsible for the corporation

being run into the ground.  And you would see that in Japan.  You

would see that very deep bow and that, you know, that apology.  And

you would -- and if you didn't do that, he may have gone out and

committed suicide. 

 

     QUESTION:  Do you think it would be unfair if Liddy gets knocked

around today by the committee? 

 

     GRASSLEY:  Only in the sense of bad decisions he's made since --

well, I suppose he was put in place in September, wasn't he?  Bad

decisions that were made since then, he's obviously responsible for

them. 

     But I don't know that you could hold him in any way responsible

for what went on five or six years before then.  And you might even

say that Spitzer, then attorney general of New York, and driving Hank

Greenberg out of the CEO of that company may have been the most major

mistakes, and that would have been a political decision that was made

by a politician in New York because, you know, I don't know Hank

Greenberg very well, but I know him a little bit. 

 

     And I think his not being in the leadership of that company has

had something to do with such a bad record that it has had since he

left and with it falling apart last summer.

 

     WHO?

 

     Mary Rae Bragg?

 

     QUESTION:  Nothing this morning.  Thank you, sir. 

 

     GRASSLEY:  Tim Rohwer?

 

     QUESTION:  Yes, Senator.  I understand that you were in a hearing

yesterday on law enforcement responses to Mexican drug cartels.  I'd

kind of like an update a little bit on what they discussed.  Are

things getting worse? 

 

     GRASSLEY:  Yes.  Now, let me explain.  I was dividing my time

between Finance yesterday and that committee.  I went and made an

opening statement, left, went back to the Finance Committee, and did

my statement and questioning there, and then I came back to Judiciary

and listened to four people ask questions before I asked questions. 

 

     And I can best tell you what I was trying to accomplish.  I'm not

sure that I have a big enough picture of what went on in the entire

committee to address your question as broadly as you might want me to.

But if you know of something, ask me. 

 

     But I would say this.  In my questioning between DEA and the

Immigration Service, it is kind of a turf battle going on there.  And

I suppose I should include the FBI, but they were not at the table. 

 

     But FBI and DEA, on one hand, is very much involved in going

after narcotics.  But there's only a few of the immigration agents

that are approved to go after drugs.  So you could have a situation

where an immigration agent, not approved to do any investigating in

drugs, knew of an illegal immigrant hauling drugs or being involved in

the drug trafficking and could not do anything about the drugs without

cross -- in other words, they could not arrest the person for that

reason, et cetera, et cetera, without working or reporting it to the

DEA. 

 

     And it just seems to me to be wrong to do that.  So my

questioning yesterday, back and forth between those two people, was

trying to get out in the open what I know exists, and that a turf

battle between them.  DEA doesn't want Immigration doing some of their

work. 

     And we should not have that smoke stack approach to law

enforcement, particularly, with the scourge that drugs happen to be in our

society.  And it's nothing but a turf battle; some agency not wanting

others to tread in their area. 

 

     And I tried to bring that out in the open by getting it out in

the open.  And this has been a turf battle I've been working on,

probably, over a period of six or seven years.  And we got memorandums

of understanding that were assigned in 19 -- early 1990's are no

longer applicable.  There was an attempt in 2004 to update that, but

they led to nothing being done because of these turf battles. 

 

     So that's what I was trying to bring out. 

 

     QUESTION:  OK. 

 

     GRASSLEY:  Jane Norman? 

 

     QUESTION:  Senator, let me go back to this line of thought about

AIG and, more broadly, corporate executives.  What is it about

American business culture that we don't hear CEOs say I'm sorry; I

admit I made bad decisions; I'm responsible for, you know, laying off

people and causing losses for the company?  Is it a generational

thing?  Is this something new?  What is it, do you think? 

 

     GRASSLEY:  Well, I don't know enough about corporational history

to say whether it's generational or not.  But I've got my theory of

why it exists, but it's nothing more than my looking at corporations

and other problems we've had with corporations in the past.  Enron

being, maybe, the one that's always in my frame of mind. 

 

     But it could be a -- it could be generational with corporate

management.  But it could be an evolving thing not to say it's

generational as well. 

 

     But let me explain it this way.  I believe that CEOs, whether

it's their idea or whether it's just the way the corporate structure

allows it, they see themselves as the company.  And boards of

directors -- Enron -- a lot of things that come out at the time of

Enron and a lot of different corporations said this.  Boards of

directors weren't really boards of directors. 

 

     And CEOs were -- had to satisfy boards of directors and vice

versa letting the CEOs do about whatever they wanted to do.  And

boards of directors, not looking out for the stockholders the way they

should. 

 

     And that sort of corporate executive, you know, how Louis XIV

says l'etat c'est moi?  The state is me?  You know, it's almost the

corporation is me, whoever the CEO is, you know.  The corporation is

the CEO. 

 

     And so I think that you get that sort of corporate structure --

they're an end unto themselves, almost a corporation unto themselves.

And it's an ethic that doesn't require anybody admitting anything's

wrong. 

     But, you know, it's also like what I found with a not of non-

profit organizations.  Most of the problem was that the board of

directors wasn't doing their job.  And when we surfaced enough bad

information about an organization, the boards of directors started

doing their job.  There's some evidence now that, after Enron, boards

of directors are looking out for the stockholders a little more than

they should.  But I don't think there's been enough evolution in that

direction. 

 

     So maybe that's too philosophical of an answer for you.  And if

it is, then be a little more direct and I'll try to answer your

question. 

 

     QUESTION:  Well, would it have been different 50 years ago? 

 

     GRASSLEY:  What did you say? 

 

     QUESTION:  Would it have been different 50 years ago?  Were

corporate executives more inclined to take responsibility? 

 

     GRASSLEY:  Well, my perception is to say yes, but it's not a

studied one.  And I'm not sure that I'm being a public servant.  You

know, I think you'd have to ask somebody that makes corporate

structure and business schools to answer your question. 

 

     QUESTION:  OK.  Thanks. 

 

     GRASSLEY:  John Skipper? 

 

     OK.  I've gone through the entire list.  Anybody else want to

jump in? 

 

     OK.  Thank you all very much.