73 AIG Bonuses Hit Million-Dollar Mark

Congress Ramps Up Rhetoric; Vows To Get The Money Back

(CBS/AP)  Troubled insurance giant American International Group paid bonuses of $1 million or more to 73 employees, including 11 who no longer work for the company, New York Attorney General Andrew Cuomo said Tuesday.

Cuomo subpoenaed information from AIG on Monday to determine whether the payments made over the past weekend constitute fraud under state law. He says contracts written in March 2008 guaranteed employees 100 percent of their 2007 pay for 2008, regardless of their performance.

Seven of the executives received more than $4 million each and one got more than $6.4 million, reports CBS News correspondent Nancy Cordes.

But Congressional Democrats vowed Tuesday to all but strip AIG executives of their $165 million in bonuses as expressions of outrage swelled in Congress over eye-catching extra income for employees of a firm that has received billions in taxpayer bailout funds.

"Recipients of these bonuses will not be able to keep all of their money," declared Senate Majority Leader Harry Reid in an unusually strong threat delivered on the Senate floor.

"If you don't return it on your own, we will do it for you," said Chuck Schumer of New York.

Republicans said President Barack Obama and his administration should have leaned harder on AIG executives to reject the bonuses. The complaints sparked a low level hum about whether Treasury Secretary Timothy Geithner could or should survive this latest political storm.

"Where was the Secretary of the Treasury? Where was Treasury before this money was paid out," Alabama Sen. Richard Shelby asked Tuesday on CBS' The Early Show.

"It's a lot of money, $165 million, and a lot more is supposed to be paid out in the future. Why did Treasury not step in and let the American people know - try to block it," he asked rhetorically. "I don't know what President Obama knew about it. I'd say he probably didn't know about it. Timothy Geithner is the Secretary of the Treasury. He either knew or should have known about what was going on. Treasury's deeply involved in this bailout."

Shelby later said that he didn't know if Geithner "should resign over this."

The furor over the bonuses, which could lessen Mr. Obama's political capital, led to a flurry of exchanges between the press and Press Secretary Robert Gibbs.

"The secretary of Treasury did as much in his legal power at the time to lessen the impact of what we all understand is outrageous," Gibbs told reporters Tuesday.

Gibbs said President Obama has confidence in Geithner and underscored that Mr. Obama is working as quickly as possible with Congress to find ways to block the bonuses or recoup that money.

Obama himself avoided the issue today, reports CBS News chief White House correspondent Chip Reid, attending a series of St. Patrick's Day events. But Obama's approval rating remains high - 62 percent - according to a CBS News poll out tonight.

But, as CBS News chief legal analyst Andrew Cohen points out, there may not be much the government can do to stop the bonus payments.

"In a normal situation, a creditor (like the United States) might be able to run into court and argue that its debtor, AIG, is about to siphon off preferential money in advance of a bankruptcy.

"But of course the United States cannot argue that AIG is heading into bankruptcy at the same time our government agents are working so hard to convince everyone that the giant company has been sufficiently buttressed," Cohen writes.

Gibbs sought to put the focus on bigger reforms ahead.

He said Mr. Obama wants both financial regulation reform and a new "resolution authority" to deal with giants like AIG that get into complex financial trouble.

According to Cuomo, AIG mailed the bonus checks Friday.

Despite the fact that the company and some federal regulators have said it was obligated by contract to make the payments, Cuomo said the bonuses might have been fraudulent if AIG officials knew the company couldn't afford them.

"You could argue if the taxpayers didn't bail out AIG, those contracts wouldn't be worth the paper it's printed on," he said Monday.

There was no immediate AIG comment following Cuomo's disclosure Tuesday of the bonus amounts. Cuomo did not release the names of the recipients.

AIG spokeswoman Christina Pretto had said Monday the company was in contact with Cuomo's office and would respond to his requests for information and the subpoena.

In a letter Tuesday to Rep. Barney Frank, chairman of the House Committee on Financial Services, Cuomo outlined the bonus and contract information and asked the panel to take up the issue at a hearing scheduled for Wednesday.

"These payments were all made to individuals in the subsidiary whose performance led to crushing losses and the near failure of AIG," Cuomo wrote. "Thus, last week, AIG made more than 73 millionaires in the unit which lost so much money that it brought the firm to its knees, forcing a taxpayer bailout. Something is deeply wrong with this outcome."

According to the attorney general's office, the top individual bonus was more than $6.4 million, and the top seven received more than $4 million each.

Separately, Frank, D-Mass., said the government should assert its rights as the owner of about 80 percent of AIG and sue to recover the bonuses.

"The time has come to exercise our ownership rights. We own most of the company. And then say, as owner, 'No, I'm not paying you the bonus. You didn't perform. You didn't live up to this contract,"' Frank told reporters.

AIG would not be the only firm named by legislation in either the Senate or the House, but there was no question whose executives were the inspiration.

"They're not going to get the financial benefit of those bonuses," said Senate Finance Committee Chairman Max Baucus, D-Mont.

In the House, Reps. Steve Israel, D-N.Y., and Tim Ryan, D-Ohio, introduced a bill that would that would tax at 100 percent bonuses above $100,000 paid by companies that have received federal bailout money.

"We will use any means necessary," said Ryan. "It boggles my mind how these executives can be so unaware of what the American people are going through."

The Internal Revenue Service currently withholds 25 percent from bonuses less than $1 million and 35 percent for bonuses more than $1 million.

But it unclear whether any new tax law so narrowly targeted at a single group would hold up in court, Cordes reports.

Nevertheless, another proposal, taxing the bonuses at 70 percent - with 35 percent paid by the bonus recipient and 35 percent paid by AIG - is making its way through Congress, Cordes reports.

AIG also was raked over the coals at a banking committee hearing on regulating the insurance industry.

"One way or another, we're going to try to figure out how to get these resources back," said Christopher Dodd, D-Conn., the panel's chairman.

"This is ridiculous," exclaimed Sen. Jon Tester, D-Mont. He said AIG executives "need to understand that the only reason they even have a job is because of the taxpayers."

Liddy is to testify Wednesday before a House subcommittee.

More AIG Related Coverage:

Excessive Righteous Indignation Over AIG

Anger Over AIG Depletes Obama's Capital

Obama May Restrict AIG Bailout Money

Poll: Frustration Growing Over Bailouts

Can AIG Get The Bonus Money Back?

Are We Taxpayers - Or Suckers?

Will AIG Flap Lead To Obama Backlash?

[juthaji]

Madoff admitted what he did and and he did something ilegal. now comes aig and or other corporations.
i write whats going on inside board meeting, most of them looking for company's interest and fwe look at each other's interest. This is our corporate culture and we have no rules and regulations in place to control a human behavior. Former GE ceoMr Welch, when he retired what he took with him ! close to billion dollar and no one criticized him. why!
GE did not go to govt for help. It may have taken some oxigen away from GE, thatany one can see.
Political favors public's money earn those politicians later board membership.
So if barney franks or any one else becomes board member of other insurance corporation, do not get surprised.
how do we know that they are not on secret payroll deposited in swiss banks.
think A open bribes!!! may be.
so relax, breath dip and ...

[noloyalisti]

I'll tell you what's funny. Watching our entire economic system go down the drain due to lack of socialist government regulation championed by the right wing propaganda machine. Now all we can do is squirm and cry. And laugh.

[midlclass]

it's funny how when the white collars bonuses are being questioned all of a sudden there contracts are legal and binding and can't be redone or changed and the out cry is to let them have there millions. It's to bad some of these same people were crying out to cut the wages and benifits of the auto-workers who legally negotiated contracts made before the bailout were forced buy republicans in congress to renegotiate or they would not help out the big three. so whats the big frakken difference. 30 dollars an hour is to much to be paid to build a car but a million dollar bonus is exceptable for driving a company into a s#%t hole. and requiring a tax payer bail out. rethink this people

[renonv5]

contracts written in March 2008 guaranteed employees 100 percent of their 2007 pay for 2008, regardless of their performance.


So there was absolutely no incentive to perform, they were going to get their money anyway. It's preposterous that they got the money and some of them don't even work for the company anymore. What a sweet deal!!!

[emperorlotku]

Seeing Congressmen complaining about AIG bonus recipients is like murderers, drug dealers and rapists looking down on pedophiles in prison. The reality is that our top officials, Obama, Dodd, McCain and all sorts of leaders took money from AIG. I am now officially voting for candidates that spend the least amount of money on their campaigns. That means they have been corrupted the least.THROW ALL THE BUMS OUT OF OFFICE. CLEAN HOUSE THIS NEXT ELECTION.QUID PRO QUO HAS GOT TO GO.

[realityzone]

The problem is plain and simple Greed, you know... the Se7en Deadly?

Don't cloud the issue especially when it's time for Wrath.

[spaceatoms]

In commerce and capitalism, there will be unprofitable companies, the U.S. panicked over a major entity closing down and did the bailout. In my opinion, its the worst financial decision ever by a President and I applaud B.O. for supporting it with good intentions at the time, but I said it at the time that I really wish he wouldn't have supported this type of economical recovery by the Bush administration. I understand many of the top brains were consulted on this but profit is a fruit of hard work and no greed, something AIG lacks in both respects.

[RogerInHawaii]

Would some journalist please see if they can get a copy of one of these AIG employment contracts that guarantees a bonus to the employee and make it public so that we can see the nature of these bonuses? Whenever I receive a bonus from my company it is accompanied by an official statement making it very clear that itis atthe sole discretion of the company to give a bonus and that receiving a bonus one year is no guarantee that a bonus will be received the next year. So how do AIG bonuses work? If they're guaranteed in the contract then they're not really a bonus, they're simply part of the employee's salary. Onthe oher hand, if the contract states that they will get additional money in specific amounts if and only if certain performance or other criteria is met by the individual, then that's a different situation and these AIG employees would appear to validly deserve what they got.

So, please, some journalist look further in to this and find out whatthose contracts actually say. Don't just take AIG's word for it that they are contractually bound to pay. Since the US givernment is now majority owner of AIG the US government should be able to clook at each and every employee contract and determine whether they are valid.

[winstrv]

Does anybody believe the Democrats will do anything or follow through with their threats? Remember their "tough" talk when it came to Burris, the Illinois Senator. They are yellow and will back down.

[Hyptnotized_Liberals]

From the Washington Post:

Obama KNEW About AIG Bonuses DAY BEFORE They Were Paid

Don't fall for Obama's acting schemes and lies folks! KNOW THE TRUTH! You all deserve it as American citizens!!

Read for yourself:

http://voices.washingtonpost.com/44/2009/03/17/obama_knew_about_aig_bonuses_d.html?wprss=44

[Hyptnotized_Liberals]

From the Washington Post:

Obama KNEW About AIG Bonuses DAY BEFORE They Were Paid

Don't fall for Obama's acting schemes and lies folks! KNOW THE TRUTH! You all deserve it as American citizens!!

Read for yourself:

http://voices.washingtonpost.com/44/2009/03/17/obama_knew_about_aig_bonuses_d.html?wprss=44

[wecandothis2]

Posted by speakinup:
Mr Geither knew about the raises - or should have before putting another 30 billion in their purses. Fire him!!!!
- - - - -

To "speakinup",

Mr. Geithner's official first day in office began 8 measly weeks ago when President Obama took office on 20-January-2009. Since then Mr. Geithner, like all the rest of Obama's cabinet ministers have been working at a brutal pace to fix the Bush-Cheney national economic disaster.

ANY REASONABLE PERSON WITH A HALF A BRAIN WOULD KNOW IT TAKES MORE THAN 8-WEEKS TO TURN AROUND THIS AIG NATIONAL ECONOMIC "FUBAR" THAT HAS BEEN BREWING AND FESTERING FOR THE LAST "8-YEARS".

[dreamwhiz1]

Based on what these execs have managed to accomplish(or destroy), it would be hard for me to accept giving them even minimum wage. They have brought this great country of ours to its knees, all for the benifit of thier glutenous greed. What strikes me as even more insane, is that our fine people in Washington are going to continue to pour our hard earned tax dollars down thier insatiable throats.I simply cannot comprehend any of this.

[Newster1]

Interesting thing is, this news hit the fan days ago, and because of that it ALERTED every one of those useless idiots that the feds are going to go after the money, so they all have had a good week or more, and maybe several more now to skip off to Aruba, park the cash in Switzerland or whatever.
Think some out of the job 65 year old idiot with a million dollars cash in the bank couldn't retire t Aruba or something now?

[bajajohn1]

One of the guys down here is blaming the Jews. I tell him Judaism is a religion not an ethnic group. I tell him Hebrew is a language, not an ethnic group. He says those people have always been money hungry and scofflaws. I tell him to prove with it examples. He doesn't. He then wants to blame Obama. I tell him this is part of last October's bailout when Bush was President and he scoffs. I tell him the U.S. Constitution does not permit congress to alter the terms of an existing contractual obligation. He says nobody reads the damn constitution. So I tell him unless there is actionable fraud in the contract formulation it is unlikely the courts will modify the bonus features of the contract. He asks, what the hell are we supposed to do? I say, the Bush administration and the Congress should have negotitiated better bailout terms and played chicken by refusing the bailout in the first place, knowing they would have to do the bailout anyway or everything crashes. Then, they should check to see the correct age of those employment contracts and check to see if The Statute of Frauds applies. Finally, I told him to stop blaming religious or ethnic groups. He would be better off blaming the former administration for falling asleep at the wheel when the meltdown began.

[jschmidt27]

The Dems leadership all appear to be ethically challenged. Dodd, Frank, Rangel, Murtha, Waters and Pelosi and Reid who protect them. Where is the outrage for corruption?

[jschmidt27]

Dodd inserted the clause in the original bailout that protected the bonuses. He is also the receiver of the largest amount of campaign money from AIG execs. Obama is number 2. But its ok they're Democrats.

[cbs_bull]

America needs a little revolution now. Post the names and addresses of those shameless AIG executives and the Wall Street crooks on the internet and let us, the small people and law-abiding citizens, take care of them...

[speakinup]

How about some accountability in the administration !

Why are we allowing this to happen time and again ?

Was this Bush's fault too ?


FIRE GEITHNER !!!!



He is a tax cheat and a fraud himself. He needs to go!!!!




Sheese - this is what we get for having a President with training wheels.

[speakinup]

Mr Geither knew about the raises - or should have before putting another 30 billion in their purses.


Fire him!!!!