AIG Asks Recipients To Give Back Part Of Bonus
RENEE MONTAGNE, host:
Back in Washington, Congress has heard and become part of the outcry over the bonus payments by AIG, and today it plans to act. The House of Representatives is expected to vote on a hastily drafted bill that would slap a 90 percent tax on big bonuses paid out by companies like AIG that got federal bailouts.
Yesterday, a House panel spent five hours grilling AIG's chief executive. He explained that the bonuses were to retain, to keep people on the payroll who could help AIG wind down its toxic operations and pay back taxpayers. NPR's David Welna has the story.
DAVID WELNA: The $165 million in bonuses AIG paid the employees of its most troubled division is less than one one-thousandth of the bailout money AIG's received since September. But as Georgia Democrat David Scott pointed out at yesterday's House Financial Services panel hearing, those payouts have infuriated both Democrats and Republicans.
Representative DAVID SCOTT (Democrat, Georgia): It's sort of like a stone in America's shoe - a stone that makes it difficult for us to walk this journey, let alone run it where we've got to go - and the American people are demanding that we get this stone out of this shoe.
WELNA: But getting that stone out may not be easy. AIG's CEO, Edward Liddy, appeared before the House panel as a man pulled out of retirement six months ago to lead a firm falling in a death spiral for a salary of one dollar a year. Liddy inherited and honored the contracts for the employee bonuses, but he also sought, yesterday, to make amends.
Mr. EDWARD LIDDY (CEO, AIG): We've heard the American people loudly and clearly these past few days. The payment of large bonuses to people in the very unit that caused so much of AIG's financial trouble does not sit well with the American taxpayer in any way, shape or form, and for a good reason.
Accordingly, this morning I've asked the employees of AIG Financial Products to step up and do the right thing. Specifically, I've asked those who received retention payments in excess of $100,000, or more, to return at least half of those payments.
WELNA: Some AIG employees, Liddy said, have already returned their entire bonus. Financial Services Committee Chairman Barney Frank told him he wanted the names of all those who'd received bonuses.
Representative BARNEY FRANK (Democrat, Massachusetts, Chairman, Financial Services Committee): I do ask that you submit those names without restriction and if you feel unable to do that, then I will ask the committee to subpoena them.
Mr. LIDDY: Congressman, if you'll let me explain, I very much want to comply with your request. I would hope it doesn't take a subpoena. If it does, then we will obviously comply with the law. I'm just really concerned about the safety of our people. So, let me just read two things to you.
All the executives and their families should be executed with piano wire around their necks - my greatest hope. If the government can't do this properly, we the people will take it in our own hands and see that justice is done. I'm looking for all the CEO's names, kids, where they live, etc.
WELNA: Frank promised he'd consult with security officials before bringing the subpoena up for a vote. Other panel members told Liddy 50 percent restitution was not enough. Still, others pressed him on whether AIG would seek more bailout money, having just gotten another $30 billion.
Mr. LIDDY: I do not anticipate asking the federal government for more money. I'd like it very much if we didn't have to draw on the $30 billion. And I'd like to give you a guarantee that that's exactly what will happen. I can't do that because my crystal ball is not that good and I do not know what's going to happen with the value of assets.
WELNA: Liddy said AIG currently owes about $80 billion to the government. His plan for making taxpayers whole begins with reducing the troubled Financial Products division's $1.6 trillion coverage of risky derivatives.
Mr. LIDDY: Because it's the big exposure that we have. If we are successful in doing that, when we are successful in doing that, then we can in fact sell all the good insurance businesses, take those proceeds and pay back the federal government. That's what we're desperately trying to do.
WELNA: Liddy may not want to come back to Congress for more money because lawmakers, such as Democrat Walter Minnick of Idaho say he's not going to get it.
Representative WALTER MINNICK (Democrat, Idaho): We should not now, throw good money after bad. Instead, we should now withdraw taxpayer support and let AIG go bankrupt.
WELNA: But Liddy also has his defenders. Spencer Bachus is the Financial Services panel's top Republican.
Representative SPENCER BACHUS (Republican, Alabama): The people who set the policies that brought AIG to the brink of total collapse are gone. We need to give this new management team the time it needs to get the job done.
WELNA: And that job, Bachus said, could still take another two or three years.
David Welna, NPR News, the Capitol.
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