[Iran Press TV Latest] AIG is considering plans to pay its employees USD 100 million in bonuses using the bailout money it has received to keep afloat, with government officials saying the payments are legal. The decision by the American International Group to pay special bonuses, similar to those paid a year earlier, has unleashed a political frenzy with critics arguing that the company should not use the taxpayers' money to pay big bonuses to its employees.
The US government paymaster, Kenneth Feinberg, who is in charge of examining how the bailout money is spent and paid back, defended AIG's decision arguing that the payments, despite creating outrage, were made based on legally binding contracts.
"These are old grandfather contracts that have the legal force of law," Feinberg told ABC's Good Morning America on Wednesday, AFP reported.
The payments, confirmed by a source close to the matter, were part of a deal in which employees agreed to accept less than they were owed to in exchange for early payouts. The move was an effort to stem the outrage that occurred last year.
Republican Senator Charles Grassley said by paying the new bonuses, "AIG has taxpayers over a barrel. The Obama administration has been outmaneuvered."
Feinberg, however, dismissed the Republican's claim, saying that the payments would end in March. "It ends this March with the last of these retention payments. Another month or so, these old, guaranteed bonuses will be a thing of the past," he said.
The bonuses by the giant insurance company have their roots in employment contracts signed in 2007 that fall outside the jurisdiction of Feinberg, who is responsible for monitoring where the bailout money from the Troubled Asset Relief Program ends up.