Officials go after AIG bonuses as CEO heads to Congress
WASHINGTON -- AIG CEO Edward Liddy Wednesday called some of the bonuses paid recently to employees "distasteful" but said the company had to run its "business as a business" and said it legally had to make the payments.
"We are acutely aware not only that we must be good stewards of the public funds we have received, but that the patience of America's taxpayers is wearing thin," Liddy said in testimony prepared to be delivered to a House subcommittee later today.
As new details emerged about $165 million in bonuses paid by the bailed-out insurance giant, lawmakers and administration officials are seeking ways to recoup the money either by imposing stiff new taxes on the extra pay or requiring the company to return it in exchange for future taxpayer aid.
"We are essentially operating AIG on behalf of the American taxpayer so that we can maximize the amount of money we pay back to the government," he said. "In order to do that, we have to continue managing our business as a business, taking account of the cold realities of competition for customers, for revenues and for employees. Because of this, and because of certain legal obligations, AIG has recently made a set of compensation payments, some of which I find distasteful."
Liddy, who was asked by the government in September to take over the failing insurer, said he had now seen the "bad side" of capitalism. "Mistakes were made at AIG on a scale few could have ever imagined possible," he said. "Those missteps have exacted a very high price, not only for AIG, but for America's taxpayers, the federal government's finances and the economy as a whole."
Liddy said the firm was working to wind down its financial products division, which was at the root of AIG's problems, but also where the bulk of the bonus recipients work. But stress in financial markets had slowed the firm's ability to sell the division's assets, he said.
The value of the division's derivatives business is now $1.6 trillion, down from $2.7 trillion.
Liddy also said the firm is working to cut its debt to the Federal Reserve, which first stepped in in September with the Treasury Department to boost the insurance giant on the brink of failure.
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