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Some Details About AIG's Bonuses Are Revealed

 
By Joanna Ossinger
FOXBusiness
     
    AIG Office Building, NYC

    Some details on American International Group’s bonus payments to people in its Financial Products division, the unit largely responsible for the insurer’s meltdown, have now been made public.

    AIG said on Sunday that it had paid bonuses of more than $165 million to people in AIGFP, the division that had engaged in risky, speculative behavior that nearly brought down the company -- and, arguably, nearly felled the global financial system. This revelation prompted New York State Attorney General Andrew Cuomo to subpoena information about those bonus payments from the company.

    On Tuesday, Cuomo sent a letter to House Financial Services Committee Chairman Barney Frank (D-Mass.) detailing what he learned -- and it’s likely going to do nothing to calm the public outrage over the payments.

    Cuomo said that 73 people received bonuses of $1 million or more. The top seven recipients each got more than $4 million, and the top recipient garnered more than $6.4 million.

    AIG would not disclose the names of the people who received the payments. Cuomo noted that the insurer justified the bonuses by saying it needed to retain these “vital” employees, but said that the failure to disclose the names makes it “impossible to test their claim.”

    AIG is now about 80%-owned by the federal government. It received an $85 billion bailout in September, and its continued need for extra cash has forced several revisions to the federal bailout that now have taxpayers on the hook for more than $150 billion.

    “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,” Cuomo said in the letter. “Something is deeply wrong with this outcome. I hope the Committee will address it head on.”

    AIG BONUS BREAKDOWN
    Financial Product Division

    • Top 7 execs: more than $4m each
       
    • 22 execs: more than $2m each
       
    • 73 execs received more than $1m
       
    • 11 execs no longer at AIG
      received retention bonuses 
    • Seven employees got $3M+
       

    • NY AG CUOMO LETTER TO REP. FRANK

    Cuomo said that last October, AIG had agreed to his office’s demand that no payments be made out of the $600 million Financial Products deferred-compensation pool. He said that was a “positive step,” but that he was “dismayed” to learn that these payments had been made out of the company’s separate Financial Products retention plan on Friday.

    Frank, in a news conference Tuesday afternoon, said it was time for the U.S. government “to take control of [AIG] more firmly,” but also urged caution. “It’s a mistake to jump into this without having done a lot of legal research,” he said.

    On Monday, President Barack Obama had said he had asked Treasury Secretary Timothy Geithner to pursue ways to get the bonus money back. However, it appears as though the Treasury might just add this to AIG's bill, and ask the company to pay the money back rather than taking it back from the individuals who received the money.

     

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