AIG 'Retention' Bonus Paid To Execs Who Already Left
Eleven of the AIG employees who were received so-called retention bonuses of $1 million or more are no longer with the company, according to a letter from New York Attorney General Andrew Cuomo that was sent to Rep. Barney Frank.
Cuomo's office also said 73 employees at AIG received at least $1 million, with the top seven bonus recipients receiving at least $4 million each.
All together the bonus payments for the top 10 employees receiving bonuses totaled $42 million, and the top 22 AIG bonus recipients received at least $2 million each, according to Cuomo's office.
Cuomo issued subpoenas on Monday for the names of AIG employees given bonuses despite their possible roles in its near-collapse. Cuomo said his office will investigate whether the bonus payments are fraudulent under state law because they were promised when the company knew it wouldn't have the money to cover them.
U.S. Treasury Secretary Timothy Geithner in a letter to congressional leaders, said taxpayer bailout recipient AIG would be forced to pay the government to compensate taxpayers for $165 million in employee bonuses as a condition for receiving a further $30 billion in government funds.
"We will impose on AIG a contractual commitment to pay the Treasury from the operations of the company the amount of the retention awards just paid," Geithner said.
Geithner also said the Treasury would deduct $165 million from the already planned $30 billion increase in AIG's federal bailout.
The new details, which were reported by CNBC, are likely to continue to fuel the outrage over the $165 million in bonus payments at AIG, which has received nearly $180 billion in bailout money from the US government.
AIG will send its chief executive officer, Edward Liddy, to Capitol Hill on Wednesday to testify before the powerful House Financial Services Committee, where he is expected to face an intense grilling. CNBC.com will carry the hearing live starting at 10 am New York time.
Lawmakers moved on Tuesday toward slapping a heavy tax on the bonuses. House of Representatives Speaker Nancy Pelosi hoped for legislation within days. Other options could be enlisting the U.S. attorney general to recover excessive pay at companies getting government aid and clamping down on bonuses at such companies.
AIG did not return calls and e-mails seeking comment.
The AIG affair is fueling public anger over the bailouts for big business and has sapped support for the new Obama administration's efforts to stabilize the financial system and pull the economy out of recession.
Rep. Frank, chairman of the House Financial Services panel, said AIG should be sued "to get those bonuses back.''
Taking a different approach, several lawmakers introduced tax bills likely to worry other businesses taking part in the government's many financial rescue programs.
Democratic Representative Gary Peters' bill, for instance, would put a 60 percent tax on bonuses over $10,000 at any company in which the government has a 79 percent or greater equity stake. It now holds about 80 percent of AIG.
The special tax would be in addition to the top 35 percent income tax rate plus state and local taxes, making it possible to recover 100 percent of the bonuses, Peters said.
The chairman of the Senate Finance Committee, Max Baucus, said he was looking at legislation.
''The country is angry and I am angry," he said. ''Companies that shouldn't be paying bonuses are ... and it's got to stop. The tax code is one way to do it."
Republican Senator Charles Grassley said in a radio interview on Monday he would feel better if AIG's top managers were to ''take that deep bow and say 'I'm sorry' and then either do one of two things: resign or go commit suicide.``
On Tuesday, he retreated from those remarks.
''What I'm expressing here obviously is not that I want people to commit suicide," Grassley said. ''But I do feel very strongly that we have not had statements of apology."
Baucus and Grassley have also proposed a 70 percent tax on bonuses for executives at companies that received money from the $700 billion financial bailout package. Their proposal would require the companies to pay a 35 percent excise tax and the other half would be paid by the recipient.
President Obama, who took office eight weeks ago, expressed ''outrage" on Monday about the bonuses, which come as the White House faces widening skepticism about financial institution bailouts— none more so than AIG.
-CNBC's Mary Thompson contributed to this report, as did AP and Reuters.