Congressional leaders, Obama outraged over AIG bonuses

Top congressional leaders expressed outrage at reports American International Group Inc. of New York will pay $165 million in 2008 retention bonuses to employees of the company’s Financial Products unit, which is responsible for underwriting the credit default swaps that caused the company to lose tens of billions of dollars and seek a federal bailout.
In a statement issued Sunday, Rep. Paul Kanjorski, D-Pa., chairman of the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, said that while he appreciates the many concessions made by AIG chief Edward Liddy — including his accepting a $1 salary and slashing bonuses and salaries for AIG’s other top executives, “AIG has a duty to spend the taxpayers’ money responsibly.”
The federal government now has an 80% stake in the company, Mr. Kanjorski said. “I am therefore extremely disappointed that AIG will move forward with its plans to pay out 2008 bonuses totaling $165 million, on top of the $55 million paid out late last year, for employees at the very business that caused the company to collapse,” he said.
Mr. Liddy is scheduled to testify at a hearing Mr. Kanjorski’s subcommittee plans to hold Wednesday morning about AIG’s operations as well as the taxpayer assistance the company has received. Mr. Kanjorski pledged to make the payouts to AIG’s Financial Products unit an “important topic” to be investigated at the hearing.
House Financial Services Committee Chairman Barney Frank, D-Mass., also was angered by the AIG payouts, according to news reports. Appearing on NBC’s “Today” show, he said the payments amounted to “rewarding incompetence.”
“These people may have a right to their bonuses,” Mr. Frank reportedly said. “They don’t have a right to their jobs forever.”
Speaking on ABC’s “Good Morning America,” Sen. Richard Shelby, R-Ala., ranking minority member of the Senate Banking Committee, also said the bonuses reward failure at the once-mighty insurance company.
“We ought to explore everything that we can through the government to make sure that this money is not wasted,” he said, according to an Associated Press report. “These people brought this on themselves. Now you’re rewarding failure. A lot of these people should be fired, not awarded bonuses. This is horrible. It’s outrageous.”
AIG has received more than $170 billion in federal assistance, according to the report.
Meanwhile, President Barack Obama said this morning issued an attack on the AIG bonuses, and pledged to try to stop them, according to the Associated Press.
Mr. Obama made the comments as he and Treasury Secretary Timothy Geithner announced a small business loan program and a series of temporary tax incentives.
He said he had ordered Geithner to “pursue every legal avenue to block these bonuses and make the American taxpayers whole.”

Related Topics: American International Group (AIG)