WASHINGTON – American International Group is giving executives in its most troubled business unit tens of millions of dollars in new bonuses even though it received a taxpayer bailout of more than $170 billion dollars.
AIG has said it must pay out the executive bonuses to meet a contractually obligated Sunday deadline, but the troubled insurance giant has agreed to administration requests to restrain future payments.
The Treasury Department determined that the government did not have the legal authority to block the current payments by the company — which are part of a larger total payout reportedly valued at $450 million. AIG declared earlier this month that it had suffered a loss of $61.7 billion for the fourth quarter of last year, the largest corporate loss in history.
Treasury Secretary Timothy Geithner has asked that the company scale back future bonus payments where legally possible, an administration official said Saturday.
This official, who spoke on condition of anonymity because of the sensitivity of the issue, said that Geithner had called AIG Chairman Edward Liddy on Wednesday to demand that Liddy renegotiate AIG's current bonus structure.
Geithner termed the current bonus structure unacceptable in view of the billions of dollars of taxpayer support the company is receiving, this official said.
In a letter to Geithner dated Saturday, Liddy informed Treasury that outside lawyers had informed the company that AIG had contractual obligations to make the bonus payments and could face lawsuits if it did not do so.
Liddy said in his letter that "quite frankly, AIG's hands are tied" although he said that in light of the company's current situation he found it "distasteful and difficult" to recommend going forward with the payments.
Bonus programs at financial companies have come under harsh scrutiny after the government began loaning them billions of dollars to keep the institutions afloat. AIG is the largest recipient of government support in the current financial crisis.
AIG also pledged to Geithner that it would also restructure $9.6 million in bonuses scheduled to go a group that covers the top 50 executives. Liddy and six other executives have agreed to forgo bonuses.
The group of top executives getting bonuses will receive half of the $9.6 million now, with the average payment around $112,000.
This group will get another 25 percent on July 14 and the final 25 percent on September 15. But these payments will be contingent on the AIG board determining that the company is meeting the goals the government has set for dealing with the company's financial troubles.
The Obama administration has vowed to put in place reforms in the $700 billion financial rescue program in an effort to deal with growing public anger over how the program was operated during the Bush administration.
That anger has focused in part on payouts of millions of dollars in bonuses by financial firms getting taxpayer support.
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6 comments:
I am outraged by this whole senario. I can see where the companies have contracts with those who are working for them for making them money/profit. But to hand them a bonus just because they are there? I don't think so. I can't see us as tax payers handing the meatheads billions of dollars because they were on the verge of bankruptcy then give them nice fat bonuses? A real american would turn down the bonus just to keep the company going. We are all doing without something now days, a job, vacations, and even if you do have a job, them cutting back hours to keep the company from laying off workers. We are all giving up something, give up your fat bonuses AIG. I don't care what your contracts say!
Yes, and it was these people who were responsible for the company going under. And it was bad - unethical - practices of the finance industry that has wrecked the economy.
So the criminals get millions in bonuses, while the victims get their houses taken away from them.
Take the money back and let them go under...
Take the job or the bonus. That $112,000 could keep some of us going 2-3 or more yrs, so let them try it. They really should just go under like many others who don't get perks or don't even have jobs or homes.
Congress should pass legislation making AIG bonuses taxable at 100%.
Call your congressman.
http://www.foxbusiness.com/story/markets/industries/finance/dodd-cracks-aig---time/
Chris Dodd makes like a cat trying to cover a turd on a tile floor with his attempts to undo an executive pay exemption placed in the stimulus bill by...Chris Dodd!
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