US Congress prepared yesterday to rip into the chief of American International Group Inc (AIG), the insurance giant that took federal bailout money then paid huge bonuses to its employees.
Edward Liddy, who only took over as chairman and chief executive of AIG at the request of the government, faces a grilling over the more than US$200 million in bonus payments.
The payouts — Liddy says they were contractually mandated — were designed to keep employees from leaving the firm’s financial products division, the sector under fire for much of the business that crippled the company.
AIG has taken US$170 billion in federal bailout money since the US financial crisis erupted late last year.
Overall, AIG has paid US$220 million in retention awards to its financial products employees; it distributed US$55 million in December and US$165 million had to be paid this month.
Congress and the administration of US President Barack Obama on Tuesday appeared to race each other to find ways to strip bonus recipients of their bonus money.
The Democratic chairman of the Senate Finance Committee, Max Baucus of Montana, and the panel’s top Republican, Charles Grassley of Iowa, proposed legislation that would require companies and individuals to pay a 35 percent tax on all retention awards and on all other bonuses over US$50,000. Others suggested even higher tax rates.
Amid the clamor, US Treasury Secretary Timothy Geithner said he was working with the Justice Department to find ways to recover some of the bonus payments.
He cited a provision in the stimulus law that gave him authority to review compensation to the most highly paid employees of firms that received aid.
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