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.