AIG bonuses cause a stir for lawmakers

Seventy three American International Group Inc. executives - including 11 who no longer work for the company - were each last week given bonuses worth more than $1 million, causing a backlash of anger from lawmakers and taxpayers.  ÔÇ£This is outrageous,ÔÇØ House Republican Leader John Boehner told reporters yesterday, ÔÇ£and I think the American people are rightly outraged.ÔÇØ  New York-based insurance company AIG paid $165 million in executive bonuses to keep employees from fleeing its troubled financial products division, after taking taxpayer-funded bailouts from the government totaling $173 billion. AIG also budgeted $57 million in ÔÇ£retentionÔÇØ pay for employees who will be dismissed according to a March 2 filing to the Securities and Exchange Commission.  Executives who sold the credit-default swaps that caused the insurance giantÔÇÖs massive losses are also among those receiving bonuses, and company chairman, Edward Liddy, admitted the payments are "distasteful and difficult" but says they are a contractual obligation. Liddy noted that AIG entered into these contracts early in 2008, before the company got into severe financial straits and needed the bailout.  The public furor over the bonuses gives administration critics a new weapon to impede ObamaÔÇÖs agenda, from his budget to plans for financial-market regulation. ItÔÇÖs also sparking a new round of legislative proposals to not only penalize ÔÇô but also potentially tax ÔÇô executives who receive bonuses at rescued companies. ┬á ÔÇ£Two weeks ago, the presidentÔÇÖs spokesman said they were confident that they knew how every dime was being spent at AIG,ÔÇØ Boehner said. ÔÇ£They didnÔÇÖt know what they were talking aboutÔǪÔÇØ ┬á Republican leaders in Congress said Treasury Secretary Timothy Geithner and White House officials should have been aware of the bonuses sooner and acted quicker. TheyÔÇÖre also seizing on AIGÔÇÖs revelations as ammunition that Congress should decline future bailouts.  Geithner told congressional leaders yesterday he will ensure taxpayers arenÔÇÖt footing the bill for the AIG bonuses. ┬á ÔÇ£We will continue our aggressive efforts to resolve the future status of AIG in a manner that will reduce systemic risks to our financial system while minimizing the loss to taxpayers,ÔÇØ Geithner wrote in a letter to House Speaker Nancy Pelosi and other lawmakers. ÔÇ£We will also explore any and all ways to accelerate this wind-down process,ÔÇØ he said, referring to the restructuring thatÔÇÖs already taking place at the insurer.  He said the government will ÔÇ£impose on AIG a contractual commitmentÔÇØ to pay the Treasury from the operations of the company the amount of retention rewards handed out, deducting the amount from the next $30 billion in aid being provided to the insurer.