US govt should recover 'outrageous' AIG bonuses

08:28, December 25, 2009      

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US President Barack Obama's compensation overseer should be given the power to recover the "outrageous" bonuses of American International Group Inc (AIG) executives who failed to return them to the company as promised, Senator Charles Schumer said.

"This is outrageous," Schumer said in an interview to be aired on Bloomberg Television's "Political Capital with Al Hunt" this weekend. "They were supposed to return them. They said they would return them. Now many of them are not with the company."

Schumer, a New York Democrat, said he'd like Kenneth Feinberg, Obama's special master on executive pay, to try to recover the money and he'd give him legislative or regulatory authority if it doesn't already exist.

"He would be very much disposed to getting the money back," Schumer said.

AIG, which received a $182.3 billion US government bailout, ignited a backlash after giving about $165 million in March to employees of its AIG Financial Products unit, which has been blamed for pushing the company to the brink of collapse.

In the wake of the bonus revelations, some Senate Democrats proposed imposing a 70 percent tax on all companies getting US bailout money.

Employees of the division pledged to return $45 million in bonus payments after New York Attorney General Andrew Cuomo threatened to release their names to the public. As of October, the employees had returned only $19 million, according to Neil Barofsky, the special inspector general overseeing the government bailouts.

While Feinberg doesn't have the authority to recover those bonuses, he can use his leverage to limit the executives' future pay.

In October, Feinberg wrote in a letter to AIG Chief Executive Officer Robert Benmosche, that four of five top AIG Financial Products executives had pledged to repay their bonuses but none had done so. "The performance of AIG Financial Products has contributed significantly to the deterioration of AIG's financial health," he wrote.

"Taking into account the payments made to these employees in early 2009," he continued, "only the payment of these employees' base salaries as in effect in Dec 31, 2008, and no further amounts of any kind, is consistent with the public interest".

Neither Treasury spokeswoman Meg Reilly nor AIG spokesman Mark Herr would comment.

Feinberg was appointed by Obama to monitor compensation of the highest-paid executives at companies that received extraordinary help from US taxpayers, including AIG.

Source: China Daily
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