Wednesday, March 18, 2009

AIG bonus millionaires have left the company

AIG bonus millionaires have left the company

Eleven AIG workers who received retention bonuses of $1 million or more have already left the company

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Eleven AIG workers that received retention bonuses of $1 million or more have already left the company, it was revealed today as Congress threatened to produce new taxes to claw back the $165 million payment.

Lawmakers competed yesterday to rain down the harshest criticism on AIG, which received more than $170 billion in assistance from taxpayers, after it handed out the bonuses to 400 staff at the financial products division (AIG FP) that caused its near-collapse.

A Republican Senator suggested that AIG’s executives should resign or commit ritual suicide in shame over the bonus payments, the details of which emerged at the weekend.

In a letter yesterday, New York Attorney General Andrew Cuomo said that the 11 workers who have left the company included one individual who received a $4.6 million payment.

A total of 73 workers were paid $1 million or more to stay at AIG to help it unwind its $1,600 billion portfolio of credit default swaps.

Mr Cuomo, who is investigating the bonus payments, wrote to Barney Frank, the chairman of the House Committee on Financial Services, that seven of AIG’s bonus recipients received more than $4 million each – a larger amount than the stricken insurer had previously indicated – while the top 10 were paid a combined $42 million.

"AIG made more than 73 millionaires in the unit which lost so much money that it brought the firm to its knees, forcing a taxpayer bailout," Mr Cuomo wrote. "Something is deeply wrong with this outcome. I hope the committee will address it head on."

Edward Liddy, who was appointed chairman and chief executive last September after AIG’s first Government bailout, is due to appear in front of Mr Frank’s committee today.

The New York Attorney General plans to subpoena AIG to extract the names and job descriptions of the AIG FP workers that received that $165 million payout after the insurer refused on Monday to divulge details of the bonuses.

Mr Cuomo wants to ascertain whether, as Mr Liddy claimed, the workers are essential to unwinding AIG.

Responding to requests last week by Treasury Secretary Timothy Geithner to halt or reduce the bonuses, Mr Liddy also said that AIG was legally powerless to change the bonus payments, which were part of a $450 million compensation pool set aside by the insurer in early 2008 before it received Government assistance.

AIG told Mr Cuomo that the money was distributed last Friday.

Democrat senators promised yesterday that the Senate Finance Committee would draft legislation within 24 hours to strip AIG PF employees of up to 91 per cent of their bonuses.

Max Baucus, chairman of the finance committee, said: "What is the highest excise tax we can impose that will stand up in court? Let’s find out what it is."

In the House of Representatives, Democrats introduced a bill to tax at 100 per cent bonuses of more than $100,000 granted by companies propped up by taxpayers.

The Internal Revenue Services currently taxes bonuses of less than $1 million at 25 per cent and those of more than $1 million at 35 per cent.

Republican Senator Charles Grassley went several steps further by suggesting that AIG’s executives should resign or committee ritual suicide.

"The first thing that would make me feel a little better toward them [would be] 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," Senator Grassley told an Iowa radio station.

Other Republicans used the bonus payment furore to heap opprobrium on the White House. Richard Shelby, the senior Republican on the Senate Banking committee, blamed Mr Geithner for failing to stop the payments. "This is just another example of where he seems to be out of the look," he said.

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