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The Situation Room
AIG Takes Some Bonuses Back; Obama: 'The Buck Stops With Me'; Hit by California Hard Knocks
Aired March 18, 2009 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
WOLF BLITZER, CNN ANCHOR: Happening now, a bailed-out company caught in a tidal wave of rage asks some executives to give their bonuses back. AIG's chairman facing angry lawmakers, and President Obama says the buck stops with him in this mess.
Plus, help wanted over at the FBI. The agency has lots of jobs to fill despite the recession. But beware, the competition is fierce.
And the U.S. may launch secret missile strikes deeper inside Pakistan and target dangerous new fronts in the war on terror.
I'm Wolf Blitzer. You're in THE SITUATION ROOM.
Right now, a symbol of corporate arrogance facing attack after attack after attack. Congress demanding answers from the insurance giant AIG. The American people fuming over multimillion-dollar bonuses, and President Obama vowing to stop bailed-out executives for being rewarded for failure.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I don't want to quell anger. I think people have a right to be angry. I'm angry. What I want us to do though is channel our anger in a constructive way.
(END VIDEO CLIP)
BLITZER: We're following the breaking news. The outrage over at AIG is part of our in-depth on "The Road to Rescue: The CNN Survival Guide" to this troubled economy.
Our White House Correspondent Dan Lothian is standing by, but let's go to our Senior Congressional Correspondent Dana Bash. She's up on Capitol Hill.
Where there was so much anger, I don't remember a time we saw lawmakers fuming as they were today, Dana.
DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: They sure were and, you know, they got a promise from the CEO that he's heard the rage of the American people loudly and clearly, but what he offered lawmakers immediately called inadequate.
(BEGIN VIDEOTAPE)
BASH (voice-over): AIG's chief executive came armed with a compromise.
EDWARD LIDDY, CEO, AIG: I've asked the employees of AIG Financial Products to step up and do the right thing. Specifically, I've asked those who received retention payments in excess of $100,000 or more to return at least half of those payments.
BASH: Edward Liddy said some AIG executives have already given back their bonuses. The Democratic chairman demanded the names of those who have not.
REP. BARNEY FRANK (D-MA), CHAIRMAN, FINANCIAL SERVICES COMMITTEE: I do ask that you submit those names without restriction. And if you feel unable to do that, then I will ask the committee to subpoena them.
BASH: Liddy said he was reluctant.
LIDDY: I'm just really concerned about the safety of our people.
BASH: He read some of the threats.
LIDDY: "All the executive and their families should be executed with piano wire around their necks."
BASH: Liddy argued the bonuses were not for performance, but to retain employees needed to turn around the company. Lawmakers weren't buying it and told them to give back all the bonuses.
REP. GARY ACKERMAN (D), NEW YORK: Cut your losses in financial terms. It just ain't worth it. You think you could consider doing that?
LIDDY: That's what I've attempted to set in motion this morning.
BASH: Again, not enough.
REP. MIKE CAPUANO (D), MASSACHUSETTS: Anybody you going to fire next week, or next month, or three months from now?
LIDDY: No.
BASH: The jam-packed hearing had huge lines to get in, a big audience, and lawmakers knew it.
REP. PAUL HODGES (D), NEW HAMPSHIRE: As far as the American people are concerned, I think AIG now stands for arrogance, incompetence and greed.
UNIDENTIFIED MALE: That's a god-damn disgrace.
(END VIDEOTAPE)
BASH: Now, Liddy told lawmakers that the Federal Reserve knew about these bonuses and agreed to them. He also testified under oath that the treasury secretary, Timothy Geithner, that he knew about this about two weeks ago. And that certainly conflicts with the White House timelines.
The Treasury Department, though, Wolf, they immediately put out a statement saying that Liddy simply got the timing wrong.
BLITZER: Specifically, Dana, the lawmakers, do they have any new plans, what they're going to do about this?
BASH: They do. As I said, what they heard from this hearing room today, that was not enough. And, in fact, we're going to hear from House leaders in about an hour. They're going to announce that they are going to have legislation on the floor of the House of Representatives tomorrow that essentially does what we talked about yesterday, that taxes the bonuses of these executives.
Again, you know, what they heard wasn't enough, and they're going to try to address it. The question about whether and why they didn't do it before, those are other things that we should talk about.
BLITZER: All right, Dana. Stand by.
I want to continue our coverage on the breaking news right now. Let's go over to the White House. President Obama venting his own anger at AIG and holding himself accountable.
Let's go to our White House Correspondent Dan Lothian.
Some very strong words from the president today as he was getting ready to leave the White House for California.
DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: That's right, Wolf. In fact, I had a chance to ask the president, along with some other reporters, questions about this AIG scandal. This White House really has been distracted by this scandal. They really want to focus on the economy, but this scandal on AIG just won't go away.
(BEGIN VIDEOTAPE)
LOTHIAN (voice-over): Trying to put out the AIG wildfire, President Obama said ultimately this is his mess.
OBAMA: The buck stops with me.
LOTHIAN: So why wasn't the president informed about the bonuses a lot sooner? His treasury secretary, Timothy Geithner, found out last Tuesday, and perhaps even earlier than that, according to testimony from AIG CEO Edward Liddy. But the White House says the president was not informed until two days later.
When pressed on this timelines, Mr. Obama took a pass.
OBAMA: Well, look, rather than going into sort of the details of finding it out, ultimately, I'm responsible, I'm the president of the United States.
LOTHIAN: Pressure is building on this administration. One lawmaker has even called on Secretary Geithner to resign. But on the White House lawn, before flying off to California, the president vigorously defended his treasury secretary, who was standing by his side.
OBAMA: Nobody's working harder than this guy. You know, he is making all the right moves in terms of playing a bad hand. I have complete confidence in Tim Geithner and my entire economic team.
LOTHIAN: President Obama lashed out at a culture of greed, excess and risk-taking that undermined the giant insurance company. The administration is now working with key lawmakers to fast-track legislation creating an oversight agency, aiming to prevent some of these problems down the road.
OBAMA: It would allow us proactively to get out in front, make sure that we are separating out bad assets from good, dealing with contracts that may be inappropriate.
(END VIDEOTAPE)
LOTHIAN: Wolf, I just wanted to point out that a short time ago, we got a statement from the Treasury Department, pointing out that the testimony that Mr. Liddy gave up on Capitol Hill today was simply incorrect, that, in fact, Mr. Geithner only found out about these bonuses on Tuesday. But there are still a lot of questions about the timeline. For example, you know, the president came out on Monday, was publicly outraged about this, when he found out about it last week. And why is that? Why did that happen? -- Wolf.
BLITZER: We're going to continue cover this discrepancy. Thanks very much -- Dan Lothian.
Here's another question -- did AIG have to pay their employees the $165 million in these bonuses? AIG says they it was bound by a Connecticut law to pay them out.
Let's bring in Abbi Tatton. She's working this story. Connecticut? Why Connecticut?
ABBI TATTON, CNN INTERNET REPORTER: Wolf, it's because of this -- an office park in Wilton, Connecticut. This is the headquarters of AIG's Financial Products Unit. That is the unit that has been at the root of this company's financials troubles. It's also the unit whose executives have received those $165 million in bonuses.
And its Connecticut location, AIG lawyers have pointed to, is the reason why they were bound. They had to pay.
There's a Connecticut law that states, "If an employer fails to pay an employee according to their contract, then such employee may recover twice the full amount." Essentially, if AIG didn't pay that $165 million, they could be sued for double, they could be sued for $330 million of U.S. taxpayer money.
Well, this argument is now being slammed in Connecticut. The Connecticut attorney general is calling it a joke of a justification. Lawmakers there are seeking to amend this law. And Wolf, you just heard from Dana Bash, meanwhile, that AIG's CEO has said that he's trying to recover some of this bonus money from the employees.
BLITZER: And some of them apparently have already volunteered to give back some of that money, but they are not releasing names or amounts. He's really worried about the physical security of these AIG employees and their families, given the threats that have been issued against them.
TATTON: Absolutely.
BLITZER: This is getting uglier and uglier.
Thanks very much, Abbi, for that.
Let's check in with Jack Cafferty. He has "The Cafferty File" -- Jack.
JACK CAFFERTY, CNN ANCHOR: Got more on AIG as the outrage over the bonuses reaches a fever pitch. People are wondering, why did the people in Washington, our leaders, not do more to prevent this in the first place?
The Obama administration says it didn't know until a couple of weeks ago that AIG executives were set to get $165 million in bonuses. They say Treasury Secretary Tim Geithner found out last Tuesday.
This is nonsense. And the president learned of all of this on Thursday, just one day before the controversial retention payments went through. But Geithner was running the New York Federal Reserve Bank way back last fall, when AIG got a high interest loan of $85 billion to help prevent its collapse, along with its first installment of federal bailout money, and one of Geithner's responsibilities at the time was to oversee the disbursement of that money.
None of these people apparently watch CNN.
In late January, Mary Snow, our Mary Snow, did a report on this program about the insurance giant AIG paying hundreds of millions of dollars in bonuses to its Financial Products Unit. And then there's Congress. God bless them.
When some lawmakers tried to prevent bonuses in the stimulus bill last month, they actually made an exception for preexisting contracts. Democrat Chris Dodd, who proposed the executive compensation provision, insists he did not include that exemption clause and says he doesn't know how it got there.
What? As do several other Democratic sources.
Dodd and then-candidate Barack Obama were the top recipients of AIG political contributions in 2008. Each of them got more than $100,000.
While there's no quid pro quo that we know of, you see what goes on in Washington? There's more.
The Senate passed a bipartisan amendment that would have taxed bonuses on any company getting federal bailout money if the company did not pay back the bonus money to the government. But that was stripped out of the stimulus bill during closed-dollar meetings.
This is government transparency we were promised? This is bordering on insanity.
The question is this: How much is Washington to blame for the AIG bonus scandal?
Go to cnn.com/caffertyfile and post a comment on my blog -- Wolf.
BLITZER: AIG used to give out tons and tons of money to politicians. You know, in the 2000 and 2004 campaigns, George W. Bush, running for president, you know how much money he received?
CAFFERTY: I couldn't even hazard a guess.
BLITZER: Two hundred thousand dollars from AIG.
CAFFERTY: Well, they're struggling now. They don't have that much to give away anymore. They've fallen on hard times.
BLITZER: They were very active.
CAFFERTY: Unbelievable.
BLITZER: All right, Jack. Stand by.
We're going to continue to follow the breaking news.
And remember, coming up later, a town hall meeting in California. You better believe the president of the United States will be answering questions about AIG. He's heading out to California, getting ready to land pretty soon. We'll have live coverage, and we'll have live coverage here in THE SITUATION ROOM, 7:00 p.m. Eastern, later tonight, when President Obama hosts a presidential town hall meeting.
Stocks rising, meanwhile, and you might want to thank the government. It did something that came as a huge surprise and helped spark a rally on Wall Street.
Former President Bush is given a chance to critique President Obama in his first speech since leaving office, but what does he do with that opportunity? Wait until you hear what George Bush said and what he didn't say.
And what are the biggest threats to the nation right now? I think you'll be surprised what the Homeland Security Secretary Janet Napolitano has told me in an exclusive interview.
Stay with us. You're in THE SITUATION ROOM.
(COMMERCIAL BREAK)
BLITZER: We'll have more coming up on the breaking news, what's going on, on Capitol Hill right now. The CEO of AIG, he's been testifying all afternoon about what's going on with those huge multimillion-dollar bonuses.
Stand by. We've got more on that story coming up.
Meanwhile, there are threats we all face in terms of national security. Just a short while ago, I spoke with the homeland security secretary, Janet Napolitano, in an exclusive interview. I asked her opinion of the biggest threats the United States faces. She listed terrorism, she listed drug war violence running rampant in Mexico right now, and then she said this...
(BEGIN VIDEO CLIP)
JANET NAPOLITANO, U.S. HOMELAND SECURITY SECRETARY: I think a third threat would be just the world economy. When you have a lot of countries who are very fragile to begin with, a lot of governments that are very fragile to begin with, and now you see great increases in unemployment and the like, that injects an instability that previously perhaps hadn't been there.
(END VIDEO CLIP)
BLITZER: Coming up, more of my exclusive interview with the homeland security secretary. She explains in detail why she believes this global economic meltdown could affect the U.S. homeland security. We go into specifics.
Stand by. That's coming up, my exclusive interview with the homeland security secretary.
Meanwhile, new moves today, critically important moves by the Federal Reserve, to loosen credit and to help fight the recession. It will spend up to $300 billion over the next six months to buy some long-term government bonds, and it will then buy an additional $750 billion in mortgage-backed securities. The Fed did not take any action on interest rates, leaving them as they are right now, which is very low.
(STOCK MARKET REPORT)
Attention, California. Get ready to greet the president of the United States. He's on his way there right now. He should be landing fairly soon.
We'll have live coverage. Among other things, he's going to be doing a town hall meeting. We'll have live coverage. That's coming up here in THE SITUATION ROOM.
Here's a question, though. Is the state economy causing Californians to suffer? And how much specifically?
Let's bring in Tom Foreman. He's taking a look at California. Because a lot of people believe, as goes California, Tom, so goes the nation.
TOM FOREMAN, CNN CORRESPONDENT: That is absolutely right, Wolf.
As we heard a moment ago, we're worried about the world economy. For the United States, California's economy is the world. You have to think about this.
This is by far the most populated state in this country, more than 37 million people there, around that many. That's much more than others.
And look at these unemployment rates. When you compare it to other places, the lower it is, the less problems they have.
You can see their neighbors have problems, but California is really getting hammered out here. They have an unemployment rate over 10 percent. Only Michigan and Rhode Island right now, Wolf, have worse numbers than California.
BLITZER: And the housing market is a real problem out there, isn't it?
FOREMAN: The housing market really is. And I want to show you something here.
Just like we set up an arrangement here where you can see the worse problem because it's the highest, if we drill down on California right now, look at what happens in here. These are some of the counties down to the south that the president is going to go take a look at. And if you look at those counties, and we come in a little bit closer, you can see the foreclosure rate.
Orange County, one in every 272 homes foreclosed upon. Move up a little bit north here to Los Angeles County, one in every 209 homes foreclose upon.
And then worse, if you were to go just a little bit over here to the east, look at this, Riverside County, one in 77 homes in trouble. Up here in San Bernardino County, one in 82 homes in foreclosure right now.
This is having an enormous affect on this state, Wolf, and you can see how it's hitting Californians all over, which means it's hitting all of us -- Wolf.
BLITZER: What about the budget deficit in the state of California?
FOREMAN: This is a very good point, Wolf, because we've been making this point over and over again. Even if we can fix the overall U.S. economy, these states out here are really hurting and they're going to continue doing so.
When you look at California, you move up north and you go to Sacramento, right now they are dealing with enormous problems. Governor Schwarzenegger, up there, has talked about it a lot. They're trying to make cuts, they're trying to do whatever they can, but all of these problems we are talking about hurt the revenue for the state. And right now, this year, California is expecting a budget shortfall of -- well, it was there for just a moment -- $15 billion with a "B."
That's a lot, Wolf. And as long as they have a problem, we all have problems.
BLITZER: Given the population of that state.
All right, Tom. Thanks very much.
In just a couple of hours, Californians are going to have a chance to question the president of the United States. He'll be participating in a town hall meeting in Costa Mesa, California. Those in the audience will certainly get to ask the president whatever they want.
CNN will have special live coverage of this presidential town hall meeting. That's coming up here in THE SITUATION ROOM. Stand by for that.
The FBI is looking for you. It's looking for some qualified applicants for some fairly exciting job opportunities.
Let's bring in our Homeland Security Correspondent Jeanne Meserve. She's taking a look at this story.
And they're looking for a few good people out there.
JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: That's right. It's hard to imagine there's an upside to this tight job market, but it does -- we did find one. It means more and better applicants for FBI positions. All kinds of positions, we aren't just talking about agents.
(BEGIN VIDEOTAPE)
MESERVE (voice-over): They are shuffling through applications at the FBI -- thousands of applications, tens of thousands of applications, hundreds of thousands of applications.
JOHN RAUCCI, FBI ASSISTANT DIRECTOR: We have received approximately 270,000 applications. And this year we hope to hire 850 special agents and approximately 2,100 professional staff employees.
MESERVE (on camera): So that is about 1,000 applications per job.
RAUCCI: Yes, it is.
UNIDENTIFIED FEMALE: Well, we'd like to bring you in for an interview.
MESERVE (voice-over): In about six weeks, the FBI got almost four times the applications it usually gets in an entire year. It's no mystery why.
DONNA GILL LUMPKIN, JOB SEEKER: There's a lot of people out of work, a lot of people looking for a job.
MESERVE: Donna Gill Lumpkin, a divorced mother of two, lost her job in November.
GILL LUMPKIN: Right now, the college fund is on pause. It's the survival fund. We're trying to survive.
MESERVE: Gill Lumpkin hopes her experience selling radio ad time will make her a good candidate for an FBI recruiting position. She's come to the conclusion that, in this economy, a government job looks mighty good.
GILL LUMPKIN: It gives me stability of employment. It affords me an opportunity to have great benefits.
MESERVE: The FBI is recruiting agents and much more -- people with science skills to work in their labs, analysts that speak other languages. Even auto mechanics to help maintain the FBI's fleet of cars.
AL SMITH, FBI AUTOMOTIVE PROGRAM: Hopefully we'll get some of those techs that have worked for dealerships over years, and the dealerships have closed down, and now they're looking for a steady job.
MESERVE: One hundred and twenty have applied for six mechanic positions.
In many cases, FBI salaries are lower than those elsewhere.
RAUCCI: In years past, it was often difficult to find people with a science and technology background or a chemistry background or a biology background because we were competing against the private sector.
MESERVE: Not now. And that means 270,000 people are, like Donna Gill Lumpkin, hoping and praying for a job offer.
GILL LUMPKIN: Amen.
(END VIDEOTAPE)
MESERVE: The FBI is now interviewing applicants for jobs that may be at any one of the 56 different FBI offices. Those who make the final cut will have to undergo background checks and drug tests. Even the auto mechanics you hire. Should be on the job by September, but that's a long wait if you're currently unemployed.
BLITZER: Yes, but a job is a job, especially a good civil service job with the FBI. It's pretty desirable for a lot of folks right now.
MESERVE: Absolutely. BLITZER: Thanks very much, Jeanne.
The Bush administration first signed off on the bailout for AIG. Do Republicans accept some blame for failing to avoid this bonus debacle?
Stand by. I'll be speaking live with the House Minority Leader John Boehner.
And President Obama now has some plans to travel to an international hot spot. We've just received word from the White House on where he's going.
You're in THE SITUATION ROOM.
(COMMERCIAL BREAK)
BLITZER: To our viewers, you're in THE SITUATION ROOM.
Happening now, the economy and homeland security. What happens if the global financial meltdown causes whole governments to fall? And what can we do to prepare? My exclusive interview with the Homeland Security Secretary Janet Napolitano, that's coming up.
The AIG bonus controversy. Word of those payments hit the news six weeks ago, so why are we only hearing about the outrage now?
We're taking a closer look.
And the economic crisis intensifying. Millions of Americans are finding themselves unemployed, but we found one industry that's growing, and even adding jobs. It's a green collar success story on CNN's "Road to Rescue."
I'm Wolf Blitzer. You're in THE SITUATION ROOM.
We're following the breaking news right now as the chairman of AIG testifies before Congress and agrees to reduce some of those controversial bonuses. There's a whole lot of finger-pointing going on today about AIG's financial mess and those outrage bonuses given to some top executives.
So here's the question: Who should share in the blame?
All this week, CNN is using its vast resources to investigate the economic crisis and the "Road to Rescue."
We're joined now by Poppy Harlow of CNNMmoney.com.
Poppy, what's going on now? Because there are a lot of red faces out there, a lot of embarrassment.
POPPY HARLOW, CNNMONEY.COM: You know, Wolf, a lot of finger- pointing right now. And Ed Liddy is definitely in the hot seat right now on Capitol Hill. But we have to look back at how AIG got into this entire mess, the other men behind this company, because this goes back for years.
And we're focussing on $165 million in bonuses, but this company has gotten upwards of $170 billion in government aid. The reason behind that, one very risky product that went very bad. We're talking about credit default swaps, and what those are, are essentially a guarantee that an underlying security will not default on its payment.
Hank Greenberg, the man that was the CEO of this company from 1968 to 2005, he created a division called AIG Financial Products. You've heard about that by now. That's where all these CDSs, these credit default swaps came from. All right?
He started these. Now, he tells us that, under his watch, while he was at the helm of this company, very few risky CDS bets were made. There are many people that disagree with him.
I posed this question to him today on the phone, and he reiterated what he told me when we sat down one-on-one back in November. Take a quick listen to that.
(BEGIN VIDEO CLIP)
HARLOW: Let's talk about the risk management part of it, because you have said our risk management was in place and it was fundamentally strong. However, in terms of CDSs, that a lot of people blamed for what went wrong, some of those had to come on your watch.
HANK GREENBERG, FORMER CHAIRMAN AND CEO, AIG: Oh, a tiny amount. It was a tiny amount. They went wild after we left the company. They went wild.
(END VIDEO CLIP)
HARLOW: All right, Wolf. I'm going to read you a statement coming out of AIG to us at CNNMoney just a few weeks ago, saying, "Hank Greenberg was directly responsible for the formation of FP, its compensation structure, and its varied businesses, including the multi sector CDS book."
OK?
When Hank Greenberg left the company, this man, Martin Sullivan, replaced him. And according to "Fortune" magazine, the risky bets on those CDSs came under Marty Sullivan, but they ended at the end of 2005, Wolf. So there's a lot of blame to go around here and a lot of different arguments -- Wolf.
BLITZER: Poppy, thanks very much.
Poppy Harlow reporting from New York.
Let's get back to Capitol Hill and talk about responsibility for the AIG mess.
Joining us right now is the Republican leader in the House of Representatives, the minority leader, John Boehner. Mr. Leader, thanks very much for coming in.
REP. JOHN BOEHNER (R-OH), HOUSE MINORITY LEADER: Wolf, it's good to be with you.
BLITZER: The first bailouts for AIG occurred last year during the Bush administration. Congress authorized that money.
Knowing what we know now, looking back on those initial AIG bailouts, what would you have done differently, if anything?
BOEHNER: Well, I think if you look at the facts, we were the fighting -- we're the ones that brought the fight to make sure that we had executive compensation under control. As this money was being spent and the bill was moving through Congress, we're the ones putting -- Republicans putting the restraint on who would get bonuses and how much people would get paid.
But I think, Wolf, we have to remember that Tim Geithner, now the treasury secretary, was the head of the New York Federal Reserve. This was his plan that he implemented and he is the central link...
BLITZER: But it was a plan...
BOEHNER: ... all the way through this process.
BLITZER: ... it was a plan that Henry Paulson, the secretary of the treasury, together with Ben Bernanke, the Federal Reserve chairman, and the White House, all of them said this was an essential idea because if AIG goes down, God only knows what could happen not only to the U.S. economy, but the global economy.
BOEHNER: Well, you know, listen, nobody was -- wanted to bail this out, but when you look at the real risk that the bankruptcy of AIG would have caused not only in the United States, but worldwide, I think they took the responsible action.
But nobody -- nobody thought that they'd be paying bonuses like this to the very people who caused all of these losses.
And the real question, Wolf, is that -- and Mr. Liddy's on the Hill as we speak testifying -- but how long has he known about this problem? Who did he talk to in the administration? Where did the language come from that Senator Dodd put into the stimulus bill that would exempt language, executive compensation language, exempt AIG and allow them to pay these bonuses?
BLITZER: By the way, Senator Dodd denies that he even knew about that language. He doesn't know it got in there. It's a huge mystery, where our congressional correspondent, Dana Bash, and others, our whole team, we're trying to figure out how that language got in there to exempt AIG, but Senator Dodd himself says it's a mystery to him, he doesn't know how it got there. Maybe you have some inside information.
BOEHNER: Well, that language did not exist in either the House version or the Senate version. And the compromise, the final product was written behind closed doors by the Democrat leaders. And it didn't just come from nowhere.
And so there are a lot of questions that need to be answered, and I hope we get answers soon.
BLITZER: I think that's fair enough.
Listen to what the president said today, because he seemed to be taking a direct swipe at some Republicans. Listen to this.
(BEGIN VIDEO CLIP)
OBAMA: I think it's very important to remind ourselves that there are a whole bunch of folks now who are feigning outrage about these bonuses that a year ago or two years ago or three years ago said, well, we should never meddle in these compensation plans, these are the best and the brightest, they know what they're doing, that's part of the market. And now suddenly they're outraged.
(END VIDEO CLIP)
BLITZER: How did you interpret what he was saying?
BOEHNER: I'm not quite sure what he was talking about, Wolf.
Listen, nobody in America wants all of this money to be given to our financial institutions in the form of a bailout. This is rubbing the salt in the wounds of American families and small businesses who are already hurting.
(CROSSTALK)
BLITZER: Because he seemed to be talking -- to me -- to me, as I heard him say that, he seemed to be saying, all those Republicans who want a free market, who want to deregulate, who want the government off the back of these huge corporations, look what they're -- look what we got as a result of all of that.
BOEHNER: Wolf, you have to understand, there was no deregulation of anything in the financial services industries. As a matter of fact, there was an increase in regulation.
What happened in all of this is that some people got creative in terms of how they could create new products -- new products at different parts of the company -- that were in the unregulated part of the company that caused this infection of our entire financial system.
And so there's plenty of blame to go around here. But this is diverting the attention from the fact that -- somebody in this administration knew that this money was going for bonuses and somehow that language got into this bill.
BLITZER: Yes.
BOEHNER: And all of this is at the hands of the Democrats who control Capitol Hill, control the White House, and who produced this bill.
BLITZER: Back in January, our own Mary Snow was reporting there's hundreds of millions of dollars in bonuses that are still to be paid out by AIG, but apparently no one was really paying all that close attention to that. But you make a fair point, Congressman Boehner.
One final question before I let you go. If the federal government, if the administration now says we need to spend a few more billion dollars to help AIG, are you going to be with them?
BOEHNER: I'm going to have some serious doubts about that.
Listen, this problem is not going to be solved by continuing to throw money at it. And I just think it's time for the federal government to have an exit plan. How are we going to start to get the taxpayer money back out of these companies and back into the treasury and minimize the risk to American taxpayers?
BLITZER: Congressman Boehner, thanks very much for coming in.
BOEHNER: Thank you.
BLITZER: George Bush gets a chance to critique President Obama. What does he say in his first speech since leaving office?
You're going to hear what he had to say -- right here in THE SITUATION ROOM.
(COMMERCIAL BREAK)
BLITZER: We have heard a lot about AIG over the past couple days, but what about the Bank of America? This story just coming in to THE SITUATION ROOM right now.
Let's check in with Zain Verjee.
What are we learning, Zain?
ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Wolf, the Associated Press is reporting that a judge is ordering the Bank of America to now disclose information about the bonuses that were handed out to employees at Merrill Lynch just before Bank of America bought it.
As you know, there's been some sparring about releasing that kind of information. But the judge's order, Wolf, basically reverses the temporary order of keeping that kind of individual information confidential. So, that's a pretty significant development.
Also just in to CNN, Wolf, we're learning that President Obama is announcing plans to travel to Mexico next month. Just a short while ago, he told members of the Congressional Hispanic Caucus that he's going to be holding talks with the Mexican president, Felipe Calderon, focusing basically on Mexico's fight against drug-related violence, as well as comprehensive immigration reform. And, in other news, too, Sudan's president is responding defiantly to charges from the International Criminal Court that he's committed war crimes. Speaking in the Darfur region today, President Omar al-Bashir says that court really can't touch, in his words, an eyelash on him. He then went on to accuse Western nations of trying to create chaos in his country and trying to split Darfur from the rest of Sudan -- Wolf.
BLITZER: Zain, stand by. We will get back to you shortly.
George W. Bush just had a big opportunity to criticize President Obama. Did he take it? What the former commander in chief is saying and not saying.
Plus, is AIG the target of a modern-day lynch mob? James Carville and Ken Blackwell, they're standing by live for our "Strategy Session."
And we're standing by for President Obama's town hall meeting in California. We will be carrying it live.
Stay with us. You're in THE SITUATION ROOM.
(COMMERCIAL BREAK)
BLITZER: Want to alert our viewers, we're standing by -- the president of the United States about to land in California. He's going to be holding a town hall out in California, Costa Mesa. We're going to have live coverage here in THE SITUATION ROOM. You better believe he's going to be asked about those huge bonuses for those AIG executives. Stand by.
Meanwhile, his predecessor, George W. Bush, he has not spoken publicly since leaving office, until now.
Let's bring in CNN's Elaine Quijano. She's working the story for us.
He had a good chance to critique this new president. Did he?
ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: He did not, Wolf.
And, thank nit's interesting. Former President Bush has really kept a low profile since leaving office. And, in his first speech since then, he took a decidedly different tack than his vice president.
(BEGIN VIDEOTAPE)
(CHEERING AND APPLAUSE)
QUIJANO (voice-over): In Calgary, Canada, former President George W. Bush passed on the chance to slam his successor in his first speech since leaving the White House. According to reports, as he spoke behind closed doors to a friendly audience of business leaders, Mr. Bush said: "I want the president to succeed. I love my country more than I love politics. I'm not going to spend my time criticizing him. He deserves my silence."
That echoes what he told reporters just before leaving office in January.
(BEGIN VIDEO CLIP, JANUARY 12, 2009)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm getting off the stage. I believe there ought to be, you know, one person in the klieg lights at a time. I have had my time in the klieg lights. I wish him all the best.
(END VIDEO CLIP)
QUIJANO: Despite their differences, Bush warmly welcomed Barack Obama to the White House twice after his election.
And his approach since leaving office stands in sharp contrast to his former vice president, Dick Cheney. Mr. Cheney blasted President Obama on CNN's "STATE OF THE UNION WITH JOHN KING" on national security and counterterrorism.
(BEGIN VIDEO CLIP, "STATE OF THE UNION")
JOHN KING, CNN ANCHOR: Do you believe the president of the United States has made Americans less safe?
RICHARD B. CHENEY, FORMER VICE PRESIDENT OF THE UNITED STATES: I do.
He is making some choices that, in my mind, will, in fact, raise the risk to the American people of another attack.
(END VIDEO CLIP)
QUIJANO: And, unlike Bush, Cheney also took direct aim at Obama's agenda.
(BEGIN VIDEO CLIP, "STATE OF THE UNION")
CHENEY: And, frankly, I think the programs that he has recommended and pursuing in health care, in energy, and so forth, constitute probably the biggest or one of the biggest expansions of federal authority over the private economy in the history of the republic.
(END VIDEO CLIP)
(END VIDEOTAPE)
BLITZER: Do we know when he's going to be giving his first domestic speech?
QUIJANO: Yes.
You know, Wolf, we just found out from the former president's spokesman that will be May 28. Former President Bush is going to be giving a speech to the Economic Club of Southwestern Michigan -- no cameras allowed for that.
BLITZER: Just like no cameras were allowed at this one in Calgary.
We do know that these speeches are booked through a -- a lecture agency. We don't know how much money he received, but we can assume it's in the hundreds of thousands of dollars.
QUIJANO: As a former president of the United States, you can imagine it's probably in the -- in that range.
BLITZER: Based on what the -- Bill Clinton and other former presidents receive, we know he's getting a lot of money for this. We don't know if he keeps the money or gives it to his library, but we're going to find out all that information.
QUIJANO: Yes.
BLITZER: He's not just speaking because he likes to speak.
(LAUGHTER)
BLITZER: They're getting -- they're paying him to do the speaking.
Thanks very much, Elaine, for that.
QUIJANO: Sure.
BLITZER: Who knew what, and when? We're going to show you a timeline of how the outrage over those AIG bonuses has been brewing and then erupted.
Stand by. You're in THE SITUATION ROOM.
(COMMERCIAL BREAK)
BLITZER: Huge anger out there over those bonuses to AIG executives.
Let's assess what's going on with our Democratic strategist the CNN political contributor James Carville, and Republican strategist, former Ohio Secretary of State and senior fellow at the Family Research Council Ken Blackwell.
James, one of your favorite radio commentators, Rush Limbaugh...
(LAUGHTER)
BLITZER: ... he says this about what is going on with those bonuses at AIG. Listen to this.
(BEGIN AUDIO CLIP, "THE RUSH LIMBAUGH SHOW")
RUSH LIMBAUGH, RADIO TALK SHOW HOST: The lynch mob is expanding: the peasants with their pitchforks surrounding the corporate headquarters of AIG, demanding heads. Death threats are pouring in -- all of this being ginned up by the Obama administration.
(END AUDIO CLIP)
BLITZER: All right, James, what do say to Rush?
(CHEERING AND APPLAUSE)
JAMES CARVILLE, CNN POLITICAL ANALYST: Oh, I think Rush got -- he got beat up pretty bad in our latest little scuffle, and he's trying to get himself back in the game some kind of way.
He got his mouth taped shut on "Newsweek," and he hasn't been paying attention. All these Republicans are screaming louder than the Obama administration. He's probably playing a little too much golf down there in Palm Beach.
BLITZER: Is this a vast Obama administration conspiracy, Ken?
KENNETH BLACKWELL, CHAIRMAN, COALITION FOR A CONSERVATIVE MAJORITY: Well, no, I don't think so.
I think what is happening now is that there might be an attempt to divert attention from what I consider to be some fundamental questions that need to be asked of Congressman Frank, Senator Dodd, and Treasurer Geithner.
And that is, what did they know and when did they know it, because I believe that this is a financial knot that is going to be very difficult to undo without devastating effects. You know, we now hear this notion of special taxation from a government that is getting bigger and bigger and bigger and more intrusive in our lives.
And if we go down that slope, where government can issue special taxation to cover up their mistakes...
CARVILLE: Well...
BLACKWELL: ... that's a pretty frightening notion.
BLITZER: There's no doubt there's plenty of blame to throw around. A lot of people are responsible for what has happened, Democrats, Republicans, liberals, conservatives, although the president, James, stepped up to the plate and said this. I will play this clip.
(BEGIN VIDEO CLIP)
OBAMA: We've got a big mess that we're having to clean up. Nobody here drafted those contracts. Nobody here was responsible for supervising AIG and allowing themselves to put the economy at risk by some of the outrageous behavior that they were engaged in.
We are responsible, though. The buck stops with me.
(END VIDEO CLIP)
BLITZER: Sounding very much like Harry Truman. What do you think about that, James?
CARVILLE: Well, it's undoubtedly that President Obama inherited from the last administration the biggest mess than any administration has taken since maybe Franklin Roosevelt here. I guess you could argue that.
But he's right that the buck does stop there. The Republicans just -- they just don't think there are a whole lot of bankers in this country that are worth the million-dollar bonuses. And they're pretty fixed in their opinion about this.
And I think we're going to continue to see this. I think people are going to -- we're going to continue to see this kind of anger. And obviously these people in Congress are going to continue to be asked about this. And I'm sure CNN will keep covering this story.
BLITZER: We have been getting a lot of I-Reports coming in from viewers all over the world.
Ken, I'm going to play this one for you. Listen to this.
(BEGIN VIDEO CLIP)
JIM MORRISON, I-REPORTER: Can somebody tell me why they are not handing out pitchforks right now and we are not charging AIG headquarters en masse?
(END VIDEO CLIP)
BLITZER: I mean, you get a sense that there's so much anger out there. And the CEO of AIG today said, he doesn't want to release the names of the executives who received bonuses, because they have received death threats, not only for themselves, but their families.
This is a -- apparently a deadly serious issue right now
BLACKWELL: Well, absolutely.
And I think James is right. There are a lot of fingerprints on this -- on this problem. And I really do believe that we shouldn't lose sight of the fact that the proposed solution was a financial package that, in scale and in speed that it was passed, actually outstripped the collective intelligence of Congress.
And -- and Congress has a lot of questions that need to be asked of it in terms of its oversight responsibilities. And that's on both sides of the aisle.
(CROSSTALK)
BLITZER: Unfortunately, we have got to leave it there, James, unfortunately...
CARVILLE: Can I...
(CROSSTALK) BLITZER: Go ahead. Make a quick point.
CARVILLE: I thought Mr. Liddy did a decent job today. I mean, he seemed like -- he gets a $1 year, and the guy seemed like he knew what he was talking about.
BLITZER: He stepped up to the plate as well.
All right, guys, thanks very much.
BLACKWELL: Good to be with you.
BLITZER: We're going to continue this, obviously. We're not going away from the breaking news.
The global economic meltdown is posing a threat to America's homeland security. The new homeland security secretary, Janet Napolitano, explains what she's most worried about. My exclusive interview with her, that's coming up.
And we're standing by to hear President Obama. He's heading to California right now to promote his economic priorities at a presidential town hall meeting. We're going to be carrying the town hall meeting, the question-and-answer session live.
That's coming up -- here in THE SITUATION ROOM.
(COMMERCIAL BREAK)
BLITZER: Let's go right back to Jack Cafferty for "The Cafferty File" -- Jack.
CAFFERTY: How much is Washington to blame for the AIG mess?
"Washington yet again proving how inept it is. The speed with which the bailouts occurred meant not enough attention paid to detail. There are no good guys here, Obama included. And Geithner? My God, could we have been given a more ineffectual person? Obama, for all his intelligence, has made bad decisions regarding Cabinet and adviser choices all around. Obama didn't create this, but his inexperience is showing."
Armando: "Of course Washington is responsible. Somebody in Congress filtered in that clause which allowed for bonuses to be paid for the AIG executives. We people need to know who that lawmaker was. Please, help us."
We're trying.
John in Louisiana: "Two words we're not hearing: Paulson and Bush. Why is everyone blaming Washington, Congress and Tim Geithner, who's only been on the job 60 days? Bush's treasury secretary, Hank Paulson, started all this, Jack. Paulson was given the TARP to use to buy up toxic mortgages. Instead, he gave it away, including $180 billion to AIG, with no strings attached." And Noah in South Carolina writes: "Asking, 'How much is Washington to blame for the AIG bonus scandal?' is like asking, 'How much is McDonald's to blame for the overwhelming obesity rate in America?' AIG got fat, dumb and happy off the Washington bailout value meal, and then lined their pockets with the leftovers. All the while, the American taxpayers are left homeless, jobless, and hungry, with a bleak future to look forward to. Washington and AIG need to cut the fat and get on a diet of ethics and moral fiber."
If you didn't see your e-mail here, go to my blog and look there -- Wolf.
BLITZER: Jack Cafferty, thanks very much.
To our viewers, you're in THE SITUATION ROOM.
Happening now: a threat to American security from the global economic meltdown, why the U.S. government is deeply worried -- my exclusive interview with the homeland security secretary, Janet Napolitano.
Long before AIG executives got their big checks, someone in Congress purposely left a big loophole -- loophole -- allowing for the bonuses.
