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Treasury to rework AIG aid to recoup bonuses
The U.S. government will modify a planned $30 billion capital injection for American International Group Inc to try to recoup hundreds of millions of dollars in controversial bonuses, a Treasury official said on Monday.Meanwhile, New York's top legal officer vowed to take AIG to court if it did not provide full details of the bonus payments. The U.S. government's actions came after President Barack Obama expressed "outrage" on Monday over the bonuses to AIG employees, and ordered officials to take all legal measures to block them. The Treasury Department plans to attach new provisions to the terms of its latest AIG rescue package, announced on March 2, to force repayment of the bonuses, said the official, speaking on condition of anonymity. Meanwhile, New York Attorney General Andrew Cuomo said he will subpoena the insurer for more information, including the names of those enriched by the bonuses, as taxpayers continue to pour billions of dollars into the insurer. Obama said in remarks at the White House he was "choked up with anger" over the executive payments, which is a hot button issue in the deepening recession. "How do they justify this outrage to the taxpayers who are keeping the company afloat?," said Obama. The U.S. government has spent up to $180 billion in taxpayer money to bail out AIG, and the insurance giant continues to bleed red ink. AIG said on Saturday its hands were tied contractually over $165 million in bonuses due to AIG employees on Sunday. Cuomo told reporters on a conference call on Monday that he believed the bonus payments were paid last Friday. Chief Executive Edward Liddy told U.S. Treasury Secretary Timothy Geithner in a letter on Saturday the insurer was legally obligated to make 2008 employee retention payments, but had agreed to revamp its system for future bonuses after the Obama administration objected. On Sunday, AIG disclosed that Goldman Sachs Group Inc and a parade of European banks were the major beneficiaries of $93 billion in payments -- more than half of the U.S. taxpayer money spent to rescue the massive insurer. CONTRACTUALLY REQUIRED? Cuomo, who has been pressing troubled banks and financial institutions such as AIG since last October for details of their bonus payments, said he was probing whether the AIG payments are contractually required or can be voided under New York law. "We need this information immediately in order to investigate and determine whether any of the individuals receiving such payments were involved in the conduct that led to AIG's demise and subsequent bailout," Cuomo wrote in a letter to Liddy. Cuomo said his office is investigating whether any of the retention payments may be considered fraudulent conveyances under New York law, and threatened to drag AIG into court if it fought the subpoena. Posted by: Fred 2009-03-18 |
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