US to claw back AIG bonuses, MPs angry
Washington, March 18, 2009
The Obama administration turned up the heat on AIG over its employee bonuses, saying the embattled insurer will be forced to repay US taxpayers before it gets another bailout of $30 billion.
Treasury Secretary Timothy Geithner laid out the conditions in a letter to congressional leaders as irate lawmakers moved quickly toward legislation that would slap a heavy tax on $165 million in bonuses paid by American International Group.
The AIG affair has aggravated public anger over the rescues of big business as President Barack Obama's new administration works to stabilize the financial system and pull the economy out of recession.
"We will impose on AIG a contractual commitment to pay the Treasury from the operations of the company the amount of the retention awards just paid," Geithner said in the letter.
He also said the Treasury would deduct $165 million from the $30 billion in additional taxpayer funds announced for AIG on March 2.
"We will continue our aggressive efforts to resolve the future status of AIG in a manner that will reduce the systemic risks to our financial system while minimizing the loss to taxpayers," Geithner wrote.
"And we will explore any and all responsible ways to accelerate this wind down process."
The government now holds about an 80 percent stake in AIG, a giant that once stood astride the financial system but is now surviving on three federal bailouts worth up to $180 billion.
Edward Liddy, AIG's chief executive, is sure to face heated questions on Wednesday when he testifies before the House of Representatives Financial Services Committee.
Representative Barney Frank, chairman of the powerful panel, said AIG should be sued "to get those bonuses back."
The House and Senate are making their own efforts to recoup the AIG bonus money. House Speaker Nancy Pelosi told reporters several committees have been working on legislation that the House could act on quickly.
Beyond the bonuses, anger flared anew on Sunday when AIG disclosed that Goldman Sachs Group and a host of European banks were the major beneficiaries of $93 billion in payments from the insurer -- more than half of the US taxpayer money spent to rescue it.
Executives at other financial firms receiving bailout money have also been paid bonuses, including Merrill Lynch and Morgan Stanley.
But AIG has fueled far more outrage because it has received more of the public's money than any other financial firm.
AIG was due to have paid bonuses on Sunday to employees of its financial products unit, which made bad bets on toxic mortgages and credit default swaps that hobbled the company. - Reuters