Speaker Pelosi announced today that House Democratic leaders will convene an economic forum on Monday with some of America's leading economists to help Congress develop an economic recovery plan that focuses on creating jobs and strengthening our economy:

“Just as the President and Congress worked together in recent weeks on an economic rescue plan to help bring stability to our financial markets, we must now take additional action and pass a jobs creation and economic recovery stimulus plan,” Pelosi said.

The October 13 forum, to be held in the Speaker's office in the Capitol, will help Congress develop an economic recovery plan that will create jobs by rebuilding our roads, bridges and highways, prevent cuts to vital government services such as health, education, and public safety, extend unemployment benefits, and help families cope with rising food costs.

“House Democratic leaders look forward to hearing from many of America's preeminent economic minds on what Congress and the President can do together to help families who are struggling in these difficult and worrying economic times,” Pelosi said.

Speaker Pelosi today called on the Secretary of the Treasury Henry Paulson to strengthen the conflict of interest provisions included in the Emergency Economic Stabilization Act to ensure that taxpayers' interests are protected. The Speaker said that the conflict of interest interim guidelines for contractors and asset managers who will be hired by the Treasury to run the program fall short of meeting the standards directed by Congress to protect taxpayers writing, “we all need to assure the American people of our commitment to meaningful oversight and to protecting the interests of taxpayers. I therefore urge you to reconsider your interim guidelines and to strengthen them to avoid even the appearance of conflicts of interest by the same financial institutions who may also benefit.”

The full text of the letter to Secretary Paulson:

October 7, 2008

Secretary Henry Paulson
Department of the Treasury
1500 Pennsylvania Ave., NW
Washington, D.C. 20220

Dear Secretary Paulson:

All Americans are hopeful that the recently enacted Emergency Economic Stabilization Act will be successful in instilling confidence in our financial markets. The original proposal which you submitted to Congress in mid-September did not contain essential provisions to ensure appropriate independent oversight, judicial or administrative review, or adequate safeguards to avoid conflicts of interest. As you are aware, Congress added several provisions to this legislation to significantly increase independent oversight, accountability, and transparency. In particular, Congress voted overwhelmingly to include provisions to avoid or minimize conflicts of interest.

The new law provides the Treasury Secretary discretion to decide how to address conflicts of interest through guidelines, regulations, or by prohibiting them altogether. As I have reviewed the interim guidelines issued by Treasury yesterday, and those in Treasury's solicitation for asset management and other portfolio management services, I am very concerned that they fail to meet the tough conflict of interest standard directed by Congress in the legislation.

Under these guidelines, companies that benefit from the Troubled Assets Relief Program (TARP) may also be eligible to offer asset management or other contractor services if Treasury personnel approve a mitigation plan. These guidelines would appear to permit financial institutions with a clear conflict of interest to participate in the management of the TARP, a situation that provides insufficient protection to taxpayers. Given the significance of the TARP for the recovery of our financial markets, the American public must have complete confidence that those managing the program are doing so entirely for the benefit of the public and not to benefit their own self-interests.

We all need to assure the American people of our commitment to meaningful oversight and to protecting the interests of taxpayers. I therefore urge you to reconsider your interim guidelines and to strengthen them to avoid even the appearance of conflicts of interest by the same financial institutions who may also benefit from the TARP.

best regards,

NANCY PELOSI
Speaker of the House

During today’s Oversight Committee hearing to examine the regulatory mistakes and financial excesses that led to the bailout of AIG the committee learned, among other things, that a week after the government spent $85 billion dollars bailing out AIG, executives went on a retreat at a luxury resort spending $443,343.71. Chairman Waxman asked at the hearing that a letter to Secretary Paulson about these expenditures be inserted into the record. Below is the letter:

October 7, 2008

The Honorable Henry M. Paulson, Jr.
Secretary
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220

Dear Mr. Secretary:

Today the Oversight Committee held a hearing examining the $85 billion government bailout of AIG. The hearing showed that even after the bailout, AIG has spent freely on executive compensation and perquisites. U.S. taxpayers are paying for AIG's profligate spending.

Today's hearing revealed that shortly after the bailout was signed, executives from AIG's major U.S. life insurance subsidiary, AIG American General, held a week-long conference at an exclusive resort in California. The company spent nearly half a million dollars in a single week at this resort, including thousands of dollars on catered banquets, golf outings, and visits to the resort's spa and salon.

The hearing also revealed that AIG continues to pay one million dollars a month to an official who helped bring about the company's downfall. This official, Joseph Cassano, is the former president of AIG's Financial Products division, the unit that sold the credit default swaps that caused billions in losses for AIG. Mr. Cassano resigned from his position in March 2008. Yet AIG has inexplicably decided to pay Mr. Cassano up to $34 million in unvested bonuses. Even today, it is continuing to employ him as a "consultant" for one million dollars a month.

Secretary Paulson, this situation is unfair to taxpayers. AIG received $85 billion in taxpayer money, yet it continues to lavish its executives with undeserved payments and perquisites. We urge you to protect the taxpayers' money and end this profligate spending.

Sincerely,

Henry A. Waxman
Chairman

Elijah E. Cummings
Member of Congress

Bruce Braley
Member of Congress

Jackie Speier
Member of Congress

This afternoon, the House Oversight Committee continues their hearing to examine the regulatory mistakes and financial excesses that led to government bailout of AIG. Learn more about the hearing and read prepared testimony and documents at the Oversight Committee website.

Witnesses testifying are:

Eric R. Dinallo, Superintendent, New York State Insurance Department
Lynn E. Turner, former chief accountant, Securities and Exchange Commission
Robert B. Willumstad, former Chief Executive Officer, AIG
Martin J. Sullivan, former Chief Executive Officer, AIG

Rep. Bruce Braley (D-IA) and Chairman Waxman question Robert B. Willumstad and Martin J. Sullivan on executive compensation:

Waxman: “When I retire I want to come to work for you at a million dollars a month. What a good deal that is. And what a good signal that is - the man goes out on his own in these derivative deals that bring down AIG and he gets a million dollars a month retainer in case you need his advice.”

Rep. Chris Van Hollen (D-MD) and Chairman Waxman question Robert B. Willumstad and Martin J. Sullivan on executive compensation:

Rep. Van Hollen: “I gotta say, a lot of people are scratching their heads when they look at how in good times you stick with the general scheme for pay-for-performance and in the bad times it gets reinterpreted in a way that benefits executives.”

Rep. Peter Welch (D-VT) asks about SEC oversight:

Welch: “You said that the SEC office of risk management was reduced to a staff. Did you say, of one?” Turner: “Yeah, when that gentleman would go home at night he could turn the lights out in February of this year. We had just gotten down to one person at the SEC responsible for identifying the risks at all the institutions. Welch: “So that included the $62 trillion dollar credit default swap?” Turner: "That’s correct."

Rep. Betty McCollum (D-MN) on AIG’s public statements vs. the reality of their financial situation:

Rep. McCollum: “In December 2007, for example, Mr. Sullivan told AIG investors ‘we believe we have a remarkable business platform with great prospects that represent tremendous value.’ Two months later AIG posted $5.3 billion dollar losses for the quarter.”

Rep. Jackie Speier (D-CA) on executive compensation:

Rep. Speier: “I have to tell you, you make a shameful profile of corporate America. To you Mr. Willumstad, I will say thank you for foregoing your golden parachute. And to you Mr. Sullivan, shame on you. The shareholders of that company have nothing and you walked away with $50 million dollars.”

Rep. Chris Van Hollen (D-MD) on executive compensation:

Rep. Van Hollen: “You hear a lot of talk from some of the CEOs about how they have these pay for performance plans - in the good times they benefit but when times are tough they take a hit. I think the more that we look at these different companies like AIG we find that they rig the rules so in good times they do well and in bad times they do well.”

Rep. John Yarmuth (D-KY) on executive compensation:

Rep. Yarmuth: “We had CEOs walking away from a train wreck with huge severance packages…including a $15 billion dollar severance package…My question that most every American would have is - is there any way that the compensation committee or the corporation could justify that type of activity as being responsible or in the best interest of the stockholders if there’s such a dramatic turnaround and loss…?”

At today’s Oversight Committee hearing on AIG, the Committee discovered that a week after the government spent $85 billion dollars bailing out AIG, executives went on a retreat at a luxury resort, spending $443,343.71:

Rep. Elijah Cummings (D-MD) on the expenditures:

Have you heard of anything more outrageous - a week after taxpayers commit $85 billion dollars to rescue AIG, the company’s leading insurance executives spend hundreds of thousands of dollars at one of the most exclusive reports in the nation…Let me describe for some of you the charges that the shareholders, taxpayers, had to pay. AIG spent $200,000 dollars for hotel rooms. Almost $150,000 for catered banquets. AIG spent $23,000 at the hotel spa and another $1,400 at the salon. They were getting manicures, facials, pedicures and massages while American people were footing the bill. And they spent another $10,000 dollars for I don’t know what this is, leisure dining. Bars?

Watch: