Cuomo Probe Of AIG Yields Bonus Details
MELISSA BLOCK, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.
MICHELE NORRIS, host:
And I'm Michele Norris. And we begin this hour with AIG. Details are beginning to emerge about those controversial retention bonuses. New York Attorney General Andrew Cuomo said today that 73 employees from the company's financial products division made at least a million dollars each. He also said some of those who got the most money no longer work at AIG. In a moment, we'll hear from someone making the case to pay those bonuses but first, NPR's Jim Zarroli reports on efforts to find the names and the numbers behind them.
JIM ZARROLI: Cuomo issued subpoenas to AIG on Monday to learn details about how the highly controversial bonus program was designed and who benefited from it. And today, he released a letter to the House Financial Services Committee with some of the information his office has gleaned. He said the top recipient got $6.4 million; 22 people got at least 2 million. The company agreed to pay the money a year ago. Donald Light, senior insurance analyst at the research firm Celent, says the figures suggest that AIG was too quick to pass out money and was ill-prepared for the financial tsunami heading its way.
Mr. DONALD LIGHT(Senior Insurance Analyst, Celent): It tells us that when those bonus terms were set, nobody was looking at the possibility that there is - risk has a downside as well as an upside. And you can probably make a pretty good argument that somewhere in the past 12 to 18 months, that fact should have been crystal clear.
ZARROLI: The letter also contains another detail that Cuomo calls shocking. He says AIG locked in bonuses for employees and its financial products division so that their 2008 bonuses would be no smaller than those issued in 2007. Light says that locking provision is…
Mr. LIGHT: Sweet, if you are the person receiving the bonus. And not the brightest of provisions if you are the person writing those arrangements and ultimately, on the line for paying for it.
ZARROLI: AIG has received over a $170 billion in federal assistance since last September, when it was essentially taken over by the federal government. The company's new management says it doesn't like the bonuses, either, but it is contractually obligated to pay them. It also says previous management agreed to the bonuses as a way of retaining the company's employees, even though most of the money goes to the same people who designed the volatile derivatives contracts that later caused AIG so much trouble. The company says it needed to retain those employees because they were the only ones who knew how to unwind the contracts.
But Cuomo's letter suggests that the company's move wasn't entirely successful. Eleven of the individuals who got retention bonuses of at least a million dollars have now left the company.
Jim Zarroli, NPR News New York.