President Obama vowed to try to stop the faltering insurance giant American International Group from paying out hundreds of millions of dollars in bonuses to executives, as the administration scrambled to avert a populist backlash against banks and Wall Street that could complicate Mr. Obama’s economic recovery agenda. [New York Times]
“In the last six months, A.I.G. has received substantial sums from the U.S. Treasury,” Mr. Obama said. He added that he had asked Treasury Secretary Timothy F. Geithner “to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole.” Mr. Obama called A.I.G. “a corporation that finds itself in financial distress due to recklessness and greed.”
“Under these circumstances, it’s hard to understand how derivative traders at A.I.G. warranted any bonuses at all, much less $165 million in extra pay,” Mr. Obama said. “How do they justify this outrage to the taxpayers who are keeping the company afloat?”
Increasing the pressure on A.I.G., New York State Attorney General Andrew M. Cuomo demanded on Monday that the insurer release the names of the executives in A.I.G.’s Financial Products subsidiary who are to receive the bonuses, their job descriptions and details about their performance. In a letter to Edward M. Liddy, the company’s current chief executive, Mr. Cuomo said that if he did not receive the information by 4 p.m. he would issue subpoenas demanding compliance.
The government’s rescue of the insurer began last fall with the Federal Reserve’s $85 billion emergency loan. The taxpayer assistance has now grown to $170 billion, and the government owns nearly 80 percent of the company. On Sunday, the company disclosed the names of dozens of financial institutions that benefited from the bailout money injected into A.I.G. that the insurer then paid out to satisfy financial contracts.
Edward M. Liddy is the CEO of AIG. He is a former member of the board of Goldman Sachs. Also, the former chairman, President and CEO of Allstate Insurance (the “good hands” people.)
After the first bail-out, the company was criticized by regulators and lawmakers for spending $440,000 to host a conference at a luxury hotel in California. [Financial Times]
Illinois’ senior Sen. Dick Durbin told reporters that he was trying to contain his rage over the bonuses.
"I’ve had it," he said at an unrelated news conference Monday morning. "The fact that they continue to do it while we pour in billions of dollars is indefensible."
Durbin recognized that Congress hasn’t done a good enough job of controlling bail-out money if AIG can "still pull this off." [MSNBC]
AIG started receiving the bailout money last fall under the Bush regime. Congress gave AIG the bailout money without prohibiting the way AIG could spend the money. Congress is mostly to blame, Republicans and Democrats, along with former Treasury Secretary Henry Paulson.
Related posts:
AIG = Allowing Irreversible Greed.
AIG = All in Greed.
AIG = Arn’t I Greedy.
AIG = A$#holes, in general.
This is sick. Why in the world are we helping these companies that keep sending millions to people who do not know how to run a company? They cry yet get paid millions on the “average joes” taxes. Furthermore, I fear this is just the tip of the iceberg. Look what Enterprise rent-a-car did to get bailout funds:
http://www.butasforme.com/2009/02/25/alert-enterprise-rent-a-car-may-have-fired-employees-as-fake-evidence-when-lobbing-for-bailout-money/
Not to make excuses for these people, but the bailouts are making crooks out of everyone that touches the money.