Politics

On AIG

By Karina

House Democratic leaders on news that the American International Group (AIG), which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, will give out more than $165 million in bonuses to its executives.

Speaker Pelosi:

The American people do not want their tax dollars spent on bonuses for AIG executives who have mismanaged their company into near bankruptcy. AIG executives should voluntarily forgo their excessive retention payments, but if they refuse, the U.S. Treasury should use whatever tools at its disposal to make AIG repay taxpayers.

AIG has turned on its head the basic principle that bonuses and retention payments are rewards for outstanding performance. No taxpayer funds should be used to pay bonuses or other unjustified compensation to AIG executives whose irresponsible risk-taking brought our financial system to the brink of collapse.

This week, Congress will demand further answers from AIG on the steps the government-controlled company will take to repay taxpayers. Congress and the Obama Administration are working to protect taxpayers from such irresponsible misuse of taxpayer funds.

Leader Hoyer:

It is unacceptable for a company receiving government assistance to pay exorbitant bonuses to its executives. I’m glad to hear that the Administration will pursue every legal option available to prevent the payment of these bonuses at a time when AIG is living off of government aid. I am also pleased that the Financial Services Committee is holding a subcommittee hearing this week on AIG, and we will continue our efforts to ensure that taxpayer money is spent as intended.

Chairman Frank on the Today Show this morning:

,

It does appear to me that we’re rewarding incompetence. Forget about the legal matter for a second, these bonuses are going to people who screwed this thing up enormously, who made terrible decisions. So since the federal government now, thanks to the Federal Reserve’s use of the power under that 70-year-old statute, now essentially owns the company, maybe it’s time to fire some people. We can’t keep them from getting the bonuses, but we can keep some of them from continuing in their jobs. And I am very skeptical that these retention bonuses (these people got retention bonuses) — well if they were in high school, they wouldn’t have gotten retention, they would have gotten detention. The time has probably come to look at it and get rid of some of them.

The House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises will hold a hearing at 10:00 AM on Wednesday to fully examine the American International Group (AIG), how it got into its current situation, why it has received so much federal assistance, and how to move forward. Subcommittee Chairman Kanjorski said, “the federal government has provided AIG with access to well over $150 billion in federal aid to protect the global economy. Unfortunately, taxpayers do not understand how AIG ended up in such a terrible situation, nor do they understand why the federal government continues to give it money. We must assess AIG?s progress, as well as how we move forward to ensure that any taxpayer money AIG receives is spent efficiently and effectively.” Testifying will be:

Panel 1

Mr. Scott Polakoff, Acting Director, Office of Thrift Supervision

The Honorable Joel Ario, Insurance Commissioner, Pennsylvania Insurance Department, on behalf of the National Association of Insurance Commissioners

Ms. Orice M. Williams, Director, Financial Markets and Community Investment, Government Accountability Office

Panel 2

Mr. Edward M. Liddy, Chairman and Chief Executive Officer, American International Group

Mr. Rodney Clark, Managing Director, Insurance Ratings, Standard & Poor?s

Learn more about the hearing>>

Full post as published by The Gavel on March 16, 2009 (boomark / email).