Update at bottom: Grassley backtracks some on controversial remark
Senator Charles Grassley delivered perhaps the most stinging rebuke yet to AIG executives responsible for their firm's near collapse. Rather than live in dishonor he suggested that the executives commit ritual suicide like the Japanese samurai of feudal times.
"I suggest, you know, obviously, maybe they ought to be removed," said Grassley in a radio station interview Monday. "But I would suggest the first thing that would make me feel a little bit better toward them if they'd follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide."
This is not the first time the Republican from Iowa, who is the top ranking GOP member of the Senate Finance Committee, has issued harsh criticisms of corporate executives but it's the first time he's suggested suicide.
"And in the case of the Japanese, they usually commit suicide before they make any apology," Grassley said.
Grassley spokesman Casey Mills hastened to do damage control by saying that the senator isn't calling for AIG executives to kill themselves, according to a report from the Associated Press.
"Senator Grassley has said for some time now that generally speaking, executives who make a mess of their companies should apologize, as Japanese executives do," Mills said. "He says the Japanese might even go so far as to commit suicide but he doesn't want U.S. executives to do that."
The federal government owns 80 percent of AIG thanks to a $170 billion bailout. The company lost $62 billion last quarter but that hasn’t stopped AIG from deciding to issue $165 million in bonuses to the very division viewed responsible for the company’s near collapse last year.
Public outrage at the bonuses is growing at an alarming rate. On Tuesday, The Washington Post reported that AIG was concerned enough to station guards outside AIG Financial Products.
The Post reported that death threats and angry letters have flooded e-mail inboxes of the division, which is located in Connecticut. "Irate callers lit up the phone lines. Senior managers submitted their resignations. Some employees didn't show up at all."
"It's a mob effect," one senior executive said told The Post. "It's putting people's lives in danger."
“Some political analysts fear public anger has reached a tipping point,” said CNN reporter Carol Costello. “Voters are beyond angry and maybe even more leery of government bailouts and of course that could make things much more for difficult for President Obama although he and many others are trying to force AIG to give those bonuses back.”
AIG has said there’s nothing it can do as it is bound by pre-existing contracts obligating it to pay out the bonuses to employees and executives.
AIG chairman and CEO Edward Liddy said voiding the bonuses could lead to “serious legal, as well as business consequences,” for the company.
Congress will hold a hearing on Wednesday that will cover the AIG bonuses. Liddy is scheduled to testify.
“The auto workers had a contract to. They’re being asked to modify it,” pointed out Rep. Carol Maloney (D-NY) to CNN, referencing the compromises agreed to by the United Auto Workers union that were necessary in order for the federal government to agree to the auto bailout in late 2008.
Maloney has plans to introduce legislation that will tax any bonus compensation at 100 percent.
Update: Grassley says suicide remark was just rhetoric but backtracks later
Grassley defended his controversial remark on Tuesday when he was asked about it by MSNBC's David Shuster.
"I hope you recognize rhetoric," Grassley said. "I shouldn't even have to answer that question...This isn't the first time you heard me say this, that we need to have that deep bow before the American people with some sort of an apology, remorsefulness... Taxpayers are entitled to that and not giving out bonuses in this instance is a small recognition that things aren't right and that they owe the taxpayers a lot."
Shuster, however continued to press Grassley for his suicide remark saying, "I think the issue is because so many Americans have had experience with suicide in their own lives or own families that it's jarring to hear a member of the U.S. Senate bring it up. I wonder if you regret that?"
"I think I've stated that you ought to be able to tell rhetoric when you hear it," Grassley returned, still refusing to soften his statement.
However, Grassley backtracked not long after in a conference call with reporters where he said executives shouldn't commit suicide but should offer a formal apology to the public as is done by Japanese executives when caught in a scandal.
"What I'm expressing here obviously is not that I want people to commit suicide. That's not my notion," Grassley said Tuesday. "But I do feel very strongly that we have not had statements of apology, statements of remorse, statements of contrition on the part of CEOs of manufacturing companies or banks or financial services or insurance companies that are asking for bailouts."
This video is from CNN's American Morning, broadcast Mar. 17, 2009.