AIG seeks US government nod for bonuses: report

AIG seeks US government nod for bonuses: report
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First Published: Fri, Jul 10 2009. 03 44 PM IST
Updated: Fri, Jul 10 2009. 03 44 PM IST
Washington: Insurance giant AIG is to pay millions of dollars more in executive bonuses, despite a firestorm earlier this year over the issue, and is seeking government blessing to deflect public wrath, The Washington Post said on Friday.
The taxpayer bailed-out firm is seeking approval from president Barack Obama’s “compensation czar” Kenneth Feinberg, the Post said.
Feinberg is tasked with overseeing bonuses handed out to top executives at companies that received federal money.
Once the world’s largest insurer, American International Group is now nearly 80% owned by the government under a bailout of some $180 billion, making it the largest single recipient of federal bailout money.
The millions in corporate bonuses sparked a national furor in March as US taxpayers were buckling under the devastating impact of the financial crisis -- and part of the blame for the global downturn was being laid at the doorstep of financial firms such as AIG.
“Anytime we write a check to anybody” it is highly scrutinized, an AIG official, speaking on condition of anonymity as talks with Feinberg are ongoing, told the Post.
“We would want to feel comfortable that the government is comfortable with what we are doing,” the official said.
Some $2.4 million in payments are due next week for 40 top executives, the newspaper said, but are not under Feinberg’s jurisdiction because they are delayed payments from last year.
The firm is seeking political cover, however, following the firestorm that even saw protests outside the homes of some top AIG officers.
US Federal Reserve chairman Ben Bernanke told US lawmakers at the time he wanted to sue AIG to block the hefty payouts but was talked out of it by his lawyers.
Bernanke told a congressional hearing he thought it had been “highly inappropriate” for bonuses to be paid to employees of the AIG financial products division, “the primary source of the AIG’s collapse” even though the payments were contractual.
The financial products 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.
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First Published: Fri, Jul 10 2009. 03 44 PM IST