By Elana Schor - March 16, 2009, 2:52PM
I just spoke with Rep. Alan Grayson (D-FL), a freshman on the House Financial Services Committee who's become a fast-rising star thanks to his tenacious advocacy for transparency in bailout lending by the Federal Reserve.
Grayson joined fellow Democrats as well as Republicans in blasting AIG for its refusal to give up hundreds of millions of dollars in bonus payments. He painted the government's choice as a stark one, using the metaphor of treating a wound versus amputating a limb.
"It's not clear to me at all that we're taking the correct approach by allowing AIG to continue to operate, regardless of who owns it," Grayson told me. "At this point, ownership is becoming an amorphous concern when comes to a company that borrows millions and millions without any prospect of paying it back. ... Do we continue to allow the bleeding or not?"
Converting AIG from a ward of the state in all but name to an outright arm of the government would be a politically controversial move, given the level of apprehension in Washington over calls to nationalize failing banks.
But Grayson views the dilemma facing lawmakers as a common-sense decision: AIG executives who made more than a million dollars while running the company into the ground should immediately be fired. "The people who caused the problem are not going to be able to solve it," he said.