AIG bonus lashback continues

March 16, 2009

(ChattahBox) — While it is now satisfying in some ways to see politicians coming down hard on insurance giant American International Group, it’s too bad they just didn’t have the foresight to make sure bonuses were not paid while they are receiving loans in the first place. While legal measures are not assured yet a big push is on to get AIG to drop the $165 million in bonuses awarded to senior executives. New York Attorney General Andrew Cuomo jumped into the firestorm today, demanding detailed information as to who at AIG will receive controversial bonuses and whether those individuals were involved in any way with the insurance giant’s meltdown and subsequent need for taxpayer bailout funds. In a letter directed to AIG’s government-appointed CEO, Edward Liddy, and the company’s board, Cuomo issued a 4 PM deadline today to get the info. Cuomo’s office had previously requested a “list of individuals who are to receive payments” under the AIG retention plan, “as well as their positions at the firm.” But the request was rebuffed and the same thing seems to have happened again. As Cuomo’s 4 P.M. deadline has not been met, he says he will be issuing subpoenas.

President Barack Obama also declared today that¬† he intends to stop AIG from paying out millions in executive bonuses. Obama said he had asked Geithner to use the government’s majority ownership of the company and White House lawyers to pursue “every legal avenue” to push back against the bonus payments. The president said the bonus situation underscored the need for financial regulatory reform and said the government needed “some form of resolution mechanism in dealing with troubled financial institutions, so we have greater authority to protect the American taxpayer and our financial system in cases such as this.

Barney Frank appearing on NBC’s “Today” show, summed up the frustrations of many when he said of AIG: “Maybe It’s Time To Fire Some People.”¬† Frank explained how this bonus situation wasn’t dealt with before the bailout loans were made blaming the Federal Reserve Board, which using a Depression-era statute, to give AIG its initial government bailout, before Congress passed legislation providing for additional assistance. Frank gets the no-sh*t Sherlock award for noting that, ‘he did not think sufficient safeguards were built into that initial bailout by the Fed’. But how about those loans passed afterward by congress?


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