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As Outrage Mounts over AIG, Geithner Vows to Recover Bonuses

Posted on 18 Mar 2009

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As outrage mounts from lawmakers and an outcry from taxpayers resonates across the country over executive bonuses paid by American International Group Inc. (AIG), Treasury Secretary Timothy Geithner told congressional leaders the U.S. will recoup this money paid by the insurer.

Geithner, who has come under fire from Republican lawmakers for not doing enough to stop the AIG payments, said in a letter to lawmakers last night the government will recover the money by requiring it be repaid from company operations and deducting the amount from the next $30 billion in aid being provided to the insurer. He also said the government will work to accelerate the “wind down” process of restructuring AIG.

The senior members of the Senate Finance Committee from both parties proposed taxes totaling 70 percent on bonuses at AIG and other companies getting federal money during the U.S. financial meltdown. House Speaker Nancy Pelosi directed committees there to draft several alternatives and said her chamber may consider a bill as early as this week. Other lawmakers introduced their own plans.

“Millions lost their jobs; it’s an outrage that the people who somewhat caused this problem are now paying themselves bonuses,” Senate Finance Chairman Max Baucus, a Montana Democrat, said yesterday in Washington. He and ranking Republican Chuck Grassley of Iowa also proposed limiting some forms of deferred compensation to $1 million at companies getting bailout funds.

New York-based AIG paid $165 million in executive bonuses after taking taxpayer-funded bailouts totaling $173 billion. AIG also budgeted $57 million in “retention” pay for employees who will be dismissed, according to a March 2 filing to the Securities and Exchange Commission.