Lawmakers look to reclaim AIG bonuses
Bonuses paid out to AIG executives have sparked outrage, and lawmakers are telling CEO Edward Liddy to fix the problem or they will do it for him. But what can the government really do? Steve Henn reports.
American International Group (AIG) offices in New York City. (Mario Tama/Getty Image)
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Kai Ryssdal: They were lining up to get to the microphones on Capitol Hill today. Senators and representatives alike promising to do all they can to get the AIG bonus money back. Speaker Nancy Pelosi said she's hoping for legislation on it as soon as next week. Marketplace's Steve Henn has more now on how Congress might actually be able to turn things around.
STEVE HENN: New York's Democratic Sen. Chuck Schumer had a message today for the CEO of AIG.
CHUCK SCHUMER: Mr. Liddy, I urge you to fix this mess. Because let me tell you something, we are all fed up, and if you don't fix it -- we will.
Schumer and a bipartisan group of senators sent a letter to Liddy this morning saying he should tell executives that got the bonuses to return them.
SCHUMER: Because if they don't, we plan to virtually tax all of it.
More than a dozen lawmakers are drafting bills aimed at taxing the AIG bonuses into oblivion, creating special tax rates of say 90 or a 100 percent.
Walker Todd is a former Federal Reserve attorney. He says investigators also need to look for accounting fraud at the company.
WALKER TODD: If it can be shown that the books were improperly prepared then the payment of these bonuses would be fraudulent as the tainted fruit of the tainted tree.
And that seems to be where New York's Attorney General Andrew Cuomo is headed. Cuomo revealed today that 11 executives who got more than a million dollars each for "retention bonuses," received them after leaving AIG.
And the bonus payments were not based on the executives' or the company's performance.
Instead, Cuomo said the contracts guaranteed executives the same bonus they got in 2007, even though by the time these contracts were signed in March of 2008, it was clear AIG was headed for disaster.
In Washington, I'm Steve Henn for Marketplace.
Comments
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From Kingston, WA, 03/18/2009
Want an easy way to get the AIG execs to return the bonuses voluntarily and fast? Post their "mugshots", names, and home addresses (including their vacation homes) on a web site with the amount each received. Given that we taxpayers currently "own" nearly 80% of AIG, surely this information should be available under the Freedom of Information Act. If not, someone, please get on it!
On another note...
I'm officially calling "BS" on the idea that the geniuses at AIG and the other bailed out banks are the only ones with the "talent" to unwind the credit and derivitives mess. While tedious, what really needs to happen to unfold this debacle is to methodically trace down every INDIVIDUAL who was involved in each deal. Some PERSON had to authorize and execute each facet of each transaction - even if they were in bulk. I'm sure there's an army of furloughed angry MBAs and eager beaver forensic econ students up to this challenge. Think Fargo.
Thanks for considering these ideas.
Marietta in
Kingston, WA
03/18/2009
They should have left AIG fail, and then sent the SEC dogs (not the puppies they sent to asses Madoff)
From Dallas, TX, 03/17/2009
While we all howl over AIG bonus money and congress members line up for photo ops to validate their fiscal responsibility what about the pay raises that congress gave themselves a few years ago. It seems that they have been getting an automatic cost of living raise since 2002. They get the money each year unless they vote against it. Pretty cozy deal. Why don't htey show some fiscal leadership and take cuts like the rest of us. Next stop... health insurance like they enjoy.
03/17/2009
so 80% government ownership makes AIG government employees, right? As a 30+ year gov employee, now retired, here is an idea of what their new expectations should be -- strict pay grades with controlled promotions; bonuses approved after the fact, not before, and then maxing out at about $10,000 for everyone but senior executive service; buying every cup of coffee they drink; flying coach not first class; a 135 sq ft office-- excuse me, cubicle; no expense account. You get the idea. Maybe enforcing these conditions would make giving the bonus money back in favor of privatizing AIG as quickly as they can...
From Watsonville, CA, 03/17/2009
Stepping back to the need to bail out AIG, it is assumed that they are too big to fail, a fact not in evidence. When badly run businesses, no matter the size, fail, there are smaller and better run businesses ready to step in. If AIG is using the money badly, don't give them public money.
From Boone, NC, 03/17/2009
In recent days, Mr. Liddy argued that because the bonuses were contractual, they were inviolable. But if there has been anything close to a breach of contract -- written contract, oral contract or implied contract -- wouldn't the original contract be invalidated?
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