AIG chief: Some bonuses have been returned

Mar 19, 2009
In The News

WASHINGTON — Under intense pressure from the Obama administration and Congress, the leader of bailed-out insurance giant AIG declared Wednesday that some of the firm’s executives have begun returning all or part of bonuses totaling $165 million.

Edward Liddy offered no details, and lawmakers were in no mood to wait. He was still fielding their questions when House Democratic leaders announced plans for a vote Thursday on legislation to tax away 90 percent of the extra pay for executives at AIG and many other bailed-out firms.

Liddy, brought in last year to oversee a company that has received $182 billion in federal bailout funds, said he, too, was angry about the bonuses. But he did not respond directly when advised in pungent terms to pay to the Treasury all the money handed out last weekend in "retention payments."

"Eat it now. Take it out of your profits down the road. It’s a lot sweeter now than it’s gonna be later," said Rep. Gary Ackerman, D-N.Y.

Liddy slid into the witness chair at a congressional hearing as President Barack Obama sought anew to quell a furor that has bedeviled his administration since word of the bonuses surfaced over the weekend.

Obama, who took office just under two months ago, told reporters that his administration was not responsible for a lack of federal supervision of AIG that preceded the company’s demise, nor for the decision made last year to pay what he called "outrageous bonuses."

Still, he said, "the buck stops with me." He said that "my goal is to make sure that we never put ourselves in this kind of position again," and he disclosed the administration was consulting with Congress on the possibility of creating a new agency to govern the meltdown of large financial institutions such as AIG.

Obama spoke as congressional Democrats worked on legislation designed to recoup most or all of the $165 million by exposing it to new taxes.

Rep. Charles Rangel, D-N.Y., chairman of the tax-writing House Ways and Means Committee, said the new 90 percent tax would apply to bonus money paid to employees earning more than $250,000 at firms that have received more than $5 billion in federal bailout funds. Mortgage giants Fannie Mae and Freddie Mac are covered under the proposal.

Majority Leader Steny Hoyer, D-Md., said the bill would be voted on under rules requiring a two-thirds majority for passage.

Republicans raised pointed questions about the extent of Treasury Secretary Tim Geithner’s advance knowledge of the bonuses, and stressed they had been locked out of discussions earlier this year when Democrats decided to jettison a provision from legislation that could have revoked the payments.

"The fact is that the bill the president signed, which protected the AIG bonuses and others, was written behind closed doors by Democratic leaders of the House and Senate. There was no transparency," said Sen. Charles Grassley, R-Iowa, the senior Republican on the Senate Finance Committee.

Rep. Frank Lucas, R-Okla., who is a member of the panel but did not attend the hearing, said he joined the American people in their outrage.

"I have consistently voted against these taxpayer-funded bailouts of private companies who made poor decisions,” Lucas said, describing AIG’s payment of bonuses as "unconscionable.”

"Even more disconcerting is the fact that President Obama and Secretary Geithner knew of these bonuses and continued to push for additional bailouts for AIG,” Lucas said.

Liddy’s presence in a congressional hearing room was evidence of a bipartisan opposition to the bonuses, although his status as a $1-a-year CEO called out of retirement last year to try to untangle AIG’s financial mess made him a less-than-easy target.

Liddy said that on Tuesday, he had "asked those who have received retention payments in excess of $100,000 or more to return at least half of those payments." Some have "already stepped forward and returned 100 percent," he added.

Asked by Rep. Barney Frank, D-Mass., whether he would turn over the names of individuals who received the money, as well as the amounts, he said he would do so only if assured the information not be made public.

Frank said he might seek a subpoena, and Ackerman later noted that Andrew Cuomo, the New York attorney general, was already seeking the names with a subpoena.

AIG spokesman Mark Herr said he could not say how many executives had turned back the money.

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