Special Report: Global Financial Crisis
By Chen Gang
NEW YORK, March 17 (Xinhua) -- American International Group (AIG), the
largest U.S. insurer under water, has become a public spitting target after it
revealed a 165-million-U.S. dollar bonus package to its executives.
Meanwhile, as details of the scandal were uncovered, Barack Obama's
administration scrambled to assign blame for the payouts.
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The American International Group (AIG)
building in New York's financial district, March 16, 2009. (Xinhua/Reuters
Photo)
Photo
Gallery>>> |
OUTRAGE AT AIG BONUS
New York Attorney General Andrew Cuomo disclosed details of bonuses awarded
at AIG Tuesday, saying that 96 individuals received bonuses of 1 million dollars
or more while 11 of the individuals who received "retention" bonuses are no
longer working at the company.
"They should not be paid during the bailout period. If you get my tax
dollars, my family's tax dollars, those people's tax dollars, they don't deserve
any bonuses, they don't even deserve the bailout," Martin Nellie, a New Yorker
told Xinhua.
The financially strapped AIG, which has so far received more than 170
billion dollars in a federal rescue, lost 61.7 billion dollars in the fourth
quarter of last year, the largest corporate loss in history.
U.S. congressmen vowed to all but strip AIG executives of its 165 million
dollars in bonuses after President Barack Obama expressed outrage on Monday.
"How do they justify this outrage to the taxpayers who are keeping the
company afloat," the president said, noting that the insurer is in financial
straits because of "recklessness and greed."
Obama has asked Treasury Secretary Timothy Geithner to "pursue every legal
avenue to block these bonuses and make the American taxpayers whole," he said.
"This isn't just a matter of dollars and cents. It's about our fundamental
values," Obama added.
House and Senate Democrats are drafting separate bills to tax up to 100
percent of generous bonuses awarded by AIG and other companies rescued by
taxpayer money.
Republican Senator Charles Grassley even said he would feel better if AIG's
top managers were to "take that deep bow and say 'I'm sorry' and then do either
of two things: resign or go commit suicide."
"What happened at AIG was outrageous," National Economic Council Director
Lawrence Summers said Tuesday. "The way the company was operated, the way it was
regulated, the contracts that were let, the payments of these bonuses,
acceptance of these bonuses without shame, it was outrageous."
He said Obama's administration will be "as creative as we can" to get back
at least some of the 165-million-dollar bonuses that AIG paid to executives.
POLITICAL HOT POTATO
However, the fact that AIG was set to pay bonuses to employees at the
financial-products division wasn't a secret, said the Wall Street Journal on its
website Tuesday.
AIG disclosed the retention payments in May 2008 in a securities filing. In
November 2008, AIG set up a committee to examine the bonus issue, a group
including representatives from the Federal Reserve.
"If they had wanted to reject the bonuses, they had four months to do so,"
a person familiar with the committee was quoted as saying.
Treasury Secretary Geithner, the former head of the New York Federal
Reserve Bank, who has played a central role in the AIG bailout, found out about
the impending bonuses to executives at AIG last Tuesday and alerted the White
House on Thursday, but it was too late to take effective action. So when
President Obama expressed personal outrage on Monday he knew there was nothing
more could be done to block the payouts.
In a letter to congressional leaders released late Tuesday, Geithner said
the Treasury would deduct 165 million dollars from the already planned
30-billion-dollar bailout plan.
The AIG bonus scandal is now thrown back to the Obama administration like a
political hot potato -- it's not just a matter of dollars and cents, it's about
transparency and governance. The disorder of financial bailout has been a drag
on Obama's new presidency. His job approval rating is dropping from 68 percent,
when he took office, to 61 percent, according to Gallup polling.
Geithner: AIG to pay back government for hefty bonuses
WASHINGTON, March 17 (Xinhua) -- U.S. Treasury Secretary Timothy Geithner said Tuesday that the troubled insurance giant American International Group (AIG) is to pay back the government for hefty bonuses it paid out to its executives.
"We will impose on AIG a contractual commitment to pay the Treasury from the operations of the company in the amount of the retention awards just paid," Geithner said in a letter to lawmakers. Full story
U.S. lawmakers move to strip AIG
executives of bonuses
WASHINGTON, March 17 (Xinhua) -- Lawmakers at U.S.
Congress vowed on Tuesday to all but strip executives of the troubled American
International Group (AIG) of their 165 million dollars in bonuses.
House and Senate Democrats were crafting separate
bills to tax up to 100 percent of generous bonuses awarded by AIG and other
companies rescued by taxpayer money, according to U.S. media reports. Full story
Obama slams AIG for paying bonuses to
executives
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U.S. President Barack Obama (L) and
Treasury Secretary Timothy Geithner arrive in the East Room of the White
House in Washington March 16, 2009 to make announcements on helping small
business during the economic crisis. (Xinhua/Reuters Photo)
Photo Gallery>>> |
WASHINGTON, March 16 (Xinhua) -- U.S. President
Barack Obama on Monday blasted insurance giant American International Group and
pledged to try and prevent it from giving its executives 165 million dollars in
bonuses after taking billions in federal bailout funds.
"It's hard to understand how derivative traders at
AIG warranted any bonuses, much less 165 million dollars in extra pay," Obama
said at the outset of an appearance to announce a plan to boost small businesses
loans. Full story
Obama administration unveils plan to
unlock credit for small businesses
WASHINGTON, March 16 (Xinhua) -- The Obama administration
on Monday unveiled a plan to help unlock credit for the nation's small
businesses, which have generated about 70 percent of net new jobs annually over
the past decade.
"We are taking immediate action to help ensure that credit
-- the lifeblood of America's small businesses and its economy -- gets flowing
again to entrepreneurs and business owners," said U.S. Treasury Secretary
Timothy Geithner, who with President Barack Obama unveiled the plan at the White
House. Full story
Report: AIG to pay millions in bonuses
despite gov't pressure
WASHINGTON, March 14 (Xinhua) -- Insurance giant American
International Group, which has received 173 billion U.S. dollars in federal
bailout cash, will still give its senior employees tens of million of dollars in
bonuses, The Washington Post reported. Full story
White House: Latest aid to AIG is
critical
WASHINGTON, March 2 (Xinhua) -- The U.S. government's
latest aid to the troubled insurance giant American International Group (AIG) is
critical, White House spokesman Robert Gibbs said Monday.
While answering questions raised by reporters, Gibbs did
not rule out future help for the ailing insurer. Full story
AIG to get additional $30 bln aid from
U.S. gov't
NEW YORK, Mar. 1 (Xinhua) -- American International
Group Inc. (AIG) will receive up to an additional 30 billion U.S. dollars in
federal assistance as part of the latest revamp of its government bailout, the
Wall Street Journal reported Sunday.
The new funding is intended to support AIG as it
absorbs 60 billion dollars in quarterly losses and operational and competitive
upheaval. Full story
