Washington: Bosses at embattled insurance giant AIG have agreed to pay back $50 million in bonuses, amid a public outcry over the use of taxpayer money for executive perks, New York Attorney General Andrew Cuomo said on Monday.
“So far, nine of the top 10 bonus recipients have agreed to give the bonuses back. Of the top 20, 15 have agreed to return the bonuses,” Cuomo said in a statement.
AIG has been lambasted for using $165 million of government bailout funds to pay for staff bonuses, despite massive losses at the firm.
In the final quarter of 2008, AIG posted a $61.7 billion loss, the largest quarterly loss ever recorded in the United States.
The US government has so far pumped around $170 billion into the insurance giant to keep it afloat, fearing its collapse could deepen a market-wide liquidity crisis.
News that AIG staff had received retention bonuses derived from tax payers cash prompted US lawmakers to propose a 90% tax on the premiums.
The New York Times earlier reported that $30 million of the bonus payback would come from the firm’s financial products division.
The division was widely blamed for the company’s downfall through its investments in complex financial derivatives that turned out to be worth a fraction of their on-book value.
“I would like to say this to the individuals who have given the money back: You have done the right thing. You have done what this country now needs and demands,” Cuomo said.
The give-backs come as US lawmakers on Capitol Hill mull legislation that would impose punishing taxes on executives who fail to reliquish their bonuses.
The House of Representatives last week approved a 90% tax on bonuses paid to employees who earned more than $250,000 at firms if their firms received more than five billion dollars in government rescue funds.
Meanwhile, US Treasury Secretary Timothy Geithner and Federal Reserve chief Ben Bernanke face a grilling from lawmakers Tuesday over government aid for AIG after a furor over bonuses at the troubled insurer.
Geithner and Bernanke will testify before the House of Representatives’ Financial Services Committee, where they “will have the opportunity to explain directly and publicly the actions they have taken to rescue AIG from collapse and monitor the company’s performance since then,” said Democratic Representative Paul Kanjorski.
“They have much to clarify for the American public. I look forward to their appearances,” said Kanjorski, chairman of the panel’s subcommittee on capital markets, insurance, and government-sponsored enterprises.
Also testifying Tuesday will be William Dudley, president and chief executive officer of the Federal Reserve Bank of New York