WASHINGTON, March 15, 2009 -- Rep. Elijah Cummings plans to send a letter Monday to Treasury Secretary Tim Geithner expressing his "outrage" that insurance giant AIG, the recipient of more than $170 billion in government aid, will dole out $165 million in corporate payments this week as part of its $1 billion retention program to keep senior executives at the company.
"I have been deeply outraged by the retention payment and bonus plans that the American International Group, Inc. (AIG) has continued to implement even after the receipt of what is now some $170-$180 billion in taxpayer assistance following the virtual collapse of the firm," the Maryland Democrat writes in the letter to Geithner, exclusively obtained Sunday evening by ABC News.
The embattled insurance giant has outraged lawmakers with its insistence that it is "contractually obligated" to proceed with $165 million in payments, even though Geithner told AIG CEO Edward Liddy on Wednesday that the payments were "unacceptable."
In the letter, Cummings requests information from Geithner regarding AIG's retention payment program for the Financial Products Unit, whose risky behavior was largely responsible for nearly bringing down the company.
Specifically, Cummings would like Treasury to identify exactly who in the financial products unit will be receiving these multi-million dollar retention payments, to forbid AIG from making any contractual arrangements involving employee compensation and bonuses until all federal aid has been repaid to the government, and to offer a detailed explanation of how Treasury will hold AIG accountable to its written commitment to reduce 2009 retention payments.
"It is time that we stop rewarding failure," Cummings writes. "In fact, it is long past time that those who destroyed AIG and, by the Department of the Treasury's own account, created through their reckless actions a significant systemic risk to America's economy be held accountable for their failures."
Cummings, a member of the Joint Economic Committee and House Oversight and Government Reform Committee, complains about AIG's contention that the payments are "binding obligations."
"Once again, the American taxpayers -- who never made any contractual obligations to AIG's employees -- are apparently bound to pay for AIG's management failures," Cummings says in the letter.
The lawmaker notes that in 2009 seven employees of AIG's troubled Financial Products unit will receive retention payments worth more than $3 million. He asks Geithner to identify these individuals and to determine whether they played any role in the unit's downfall.
Cummings also takes issue with Liddy's argument that AIG would not be able to "attract and retain the best and brightest talent" if the Treasury Department could adjust their compensation.
"If the employees of AIG are worried that their compensation is 'subject to continued and arbitrary adjustment by the U.S. Treasury,' I can assure them that the U.S. taxpayers now paying their salaries are outraged by the 'continued and arbitrary adjustment' of their bailout of AIG," Cummings writes. "Simply put, we as a nation can do better than this."