RENEE MONTAGNE, host:
Let's find out now how all that outrage about the AIG bonuses might affect the government's approach to repairing other crippled financial institutions. David Wessel joins us on the line. He's economics editor of the Wall Street Journal. Good morning.
Mr. DAVID WESSEL (Economics Editor, Wall Street Journal): Good morning, Renee.
MONTAGNE: You know, two of the questions of those bonuses, though, David, when you add it all up, the fact is they are the tiny fraction of the billions the government spent bailing out this company. So is this outrage coming from a sense that these guys are taking taxpayers for the ride, sort of thumbing their nose at us?
Mr. WESSEL: I think it's a symptom of a broader public anger that so much taxpayer money is being spent on bailing out the very institutions and people who made the mistakes that led to this huge financial crisis. People don't understand why it is that we have to pay them more money when they went and steered the economy off the cliff.
In fact, some of the money going to AIG is going to big foreign banks that had placed bets with AIG that went sour. It's the kind of public uproar that we saw last fall when the House of Representatives rejected President Bush's request for the first $700 billion of bailout money.
MONTAGNE: Well, then, beyond getting the bonuses back, what else might Congress do regarding AIG and other financial institutions?
Mr. WESSEL: Well, that's a good question. I mean, everybody's preoccupied with AIG at the moment because it's so much easier to understand than all the other complexities and acronyms that surround this thing. I suspect that this will force Congress, or Congress will use this opportunity to force the Treasury and the Fed to think harder about the overall structure of the AIG rescue, which isn't going very well, or maybe to put even more restrictions on what financial firms can pay their executives.
But the big pressing issue is that at some point, it looks like President Obama and Fed Chairman Bernanke and Treasury Secretary Geithner are going to have to go on their knees to Congress and say we need more money to fix the financial system. And in this climate, it'll be very difficult for them to get Congress to go along because Congress is responding to the anger from the American people. And the American people don't see why we need to put more money into this rat hole, as Senator Bond said.
MONTAGNE: Yeah, but so if Congress is reluctant to approve more money to fix the banks, I mean, does that mean that the government will just stay on the sidelines?
Mr. WESSEL: No, I don't think so. I mean, that's important. The Federal Deposit Insurance Corporation still has quite a bit of money to help a failing bank and pay off the depositors. And Congress is looking for ways to put more money into that agency, which is substantially more popular than some of the other agencies.
And they're also looking to stretch out the money they have, the money that's already been approved by Congress, either using it a lure to get private money into the banking system or to use it as leverage to get more money from the Fed, which has this wonderful feature that it doesn't need congressional okay to come up with billions and billions and billions of dollars.
MONTAGNE: And as Fed officials wrap up their regularly scheduled meeting today in Washington, is AIG going to be on their agenda?
Mr. WESSEL: It's not on their formal agenda, but I'd be surprised if it wasn't discussed. It's become a huge problem for the Fed, both in terms of their - the mechanical thing of how are they going to manage this company, and also the political uproar.
But I think that the main focus of their meeting is being, with the economy still doing very poorly, with interest - although there are some signs that maybe we're touching bottom - interest rates are at zero, the Fed has to decide whether they want to use their ability to put even more credit into the economy by buying some mortgages in the market or even buying long-term Treasury bonds to try and bring down those important interest rates.
MONTAGNE: Let me - just finally, Treasury Secretary Tim Geithner was at the New York Federal Reserve when AIG was first bailed out - now Treasury secretary, of course. How is this affecting his ability to do his job?
Mr. WESSEL: Well, it certainly isn't helping. I mean, Secretary Geithner got off to a fairly slow start because he had these problems with his personal taxes. And now while they're trying to put together a very complex and actually, in some respects, well-thought-out plan to rescue the financial system, this becomes a real sideshow.
And the fact that his hands were dirty because he was in it at the beginning of AIG, that makes it just all the worse.
MONTAGNE: David, thanks very much. David Wessel is economics editor of the Wall Street Journal.
And you're listening to MORNING EDITION from NPR News. Transcript provided by NPR, Copyright NPR.
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