AIG CEO Liddy Calls Bonuses 'Distasteful'; Asks Execs to Return Money
Facing threats, some AIG employees volunteer to return controversial bonuses.
March 18, 2009— -- As the CEO of the bailed-out insurance giant AIG faced furious lawmakers on Capitol Hill today, news emerged that some AIG employees had already come forward to return the controversial bonuses that have sparked nationwide outrage.
CEO Edward M. Liddy told Congress that he has asked executives who received $165 million in bonuses last week to "do the right thing" and return at least half the money. ABC News has learned that a number of them have volunteered to forgo their retention bonuses.
AIG may announce how many employees have agreed to give up their bonuses as early as Thursday.
The testimony of Liddy, who took over as AIG's CEO in September as part of the government's rescue efforts for the embattled firm, comes amid a furor that erupted over the revelation that AIG awarded fat retention bonuses to employees of the AIG financial products unit.
AIG's financial products unit is blamed for plunging AIG into the financial turmoil that eventually led the government to lend and invest about $170 billion in taxpayer money in the company.
"I've asked the employees of AIG financial products to step up and do the right thing," Liddy said. "Specifically I've asked those who received retention payments in excess of $100,000 or more to return at least half of those payments, some have already stepped forward and offered to give up 100 percent of their payments."
Liddy added, "We will work to ensure the highest level of employee participation in this effort in the days ahead and will keep the Congress and the American people informed of our progress."
The CEO said he was reluctant to reveal the names of those who agreed to give up their bonuses and those who didn't because public anger has been so great that they have received death threats.
One ominous threat called for AIG executives and their families to "be executed with piano wire around their necks." Another said that "if the government can't do this properly, we the people will take it in our hands and see that justice is done. I'm looking for all the CEO's names, kids, where they live, etc.," Liddy said.
"You have a legitimate request," he said, but "I want to protect the well-being of our employees."
Shortly before Liddy appeared before Congress,President Obama said that as infuriating as the bonuses are, "just as outrageous is the culture these bonuses are symptom of, the excess greed, excess compensation, the excess risk taking have all made us vulnerable and left us holding the bag."
"That kind of culture has to change," he said. The regulatory changes Obama is calling for "are going to put an end to that culture," he said.
Despite blaming corporate greed for the country's fiscal problems, Obama took responsibility for fixing it.
"The buck stops with me," he said today in an impromptu news conference.
The president said he is seeking an authority to oversee corporations like AIG "similar to what the FDIC has over banks." The authority would help in "preventing the kind of systemic risks like you've seen with AIG."
In his statement, Liddy called the the bonus payments to the financial products executives "distasteful," but says they were authorized by the company's managers before he took over six months ago to make sure AIG could retain those managers.
"Make no mistake, had I been chief executive at the time, I would never have approved the retention contracts that were put in place more than a year ago," he wrote.
Seven executives at the unit took home bonuses of more than $4 million each, with the top bonus recipient earning more than $6.4 million, according to New York Attorney General Andrew Cuomo.
But during the morning hearing, Liddy also defended some of those receiving retention bonuses, saying that they were "talented people" whose work was necessary to wind down more than a trillion in AIG business. He distinguished between those and the employees responsible for writing AIG's disasterous credit default swaps.
"The people who were primarily responsible for credit default swaps that brought us to our knees -- they're gone," he said.
Liddy added, "There's a cadre of people working at AIG very hard for the American taxpayer, trying to do everything we can to repay every single dollar. You would be proud of them."
During this morning's hearing, several members of Congress spoke out against the bonuses, including Rep. Barney Frank, D-Mass., the chairman of the House Financial Services committee. Frank said that the government, as the effective owner of AIG, should sue to recoup the money.
"What we ought to be doing is exercising our rights as these owners to bring lawsuits to say these people performed so badly, the magnitude of the losses are so great that we are justified in rescinding the bonuses," he said.
ABC News Live
24/7 coverage of breaking news and live events