Furor Mounts Over A.I.G. Bonuses

WASHINGTON, March 17 – Senator Bernie Sanders today demanded that American International Group recoup $165 million in “morally reprehensible” bonuses. If the company fails to renegotiate the bonus deals, Sanders and other senators told the troubled insurance giant, Congress will make the payouts subject to steep taxes.

Sanders (I-Vt.) and other senators sent a letter to Edward Liddy, the chairman and CEO of the company propped up by huge taxpayer bailouts, “to express our outrage” at the bonuses.

Payments of $1 million or more were given to at least 73 employees of the Financial Products unit which sold the high-risk derivatives that would have caused the company's collapse without $170 billion in taxpayer bailout money.  The company has received more bailout money than any other single firm, and is now 80 percent government-owned.

“For a company that would not exist anymore but for a $170 billion taxpayer funded rescue, it is simply morally unacceptable to spend $165 million on bonus payments, and…$450 million over the next two years rewarding the employees that helped fuel the nation’s financial crisis,” the senators wrote.

Unless the contracts that resulted in the bonuses are renegotiated, the senators told A.I.G., “we stand ready to take the difficult, but necessary, step of working to enact legislation that would allow the government to recoup these bonus payments, perhaps by imposing a steep tax,” the letter from the senators asserted.

New details about the bonuses were divulged today by New York Attorney General Andrew M. Cuomo, who said the highest bonus was $6.4 million. Six other employees received more than $4 million. Another 15 people received bonuses of more than $2 million, and 51 received bonuses between $1 million and $2 million.

Moreover, according to Cuomo, 11 of those who received what A.I.G. claimed were “retention” bonuses no longer work at A.I.G., including one who received $4.6 million.

To read the senators’ letter, click here.