Treasury, Congress go after AIG bonuses

WASHINGTON -- As new details emerged about $165 million in bonuses paid by insurance giant AIG, lawmakers and administration officials sought 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.

Treasury Secretary Timothy Geithner — who had come under criticism for his handling of the issue by Republican lawmakers, including Sen. Richard Shelby, R-Ala. — promised in a letter Tuesday night to House Speaker Nancy Pelosi that Treasury will recover all the money.

Geithner said if Treasury is unable to force AIG employees to return the money, he will require the company to pay back the bonus money as a condition of receiving an additional $30 billion in taxpayer money promised earlier this month.

In his letter, Geithner acknowledged "considerable outrage" in Congress after a day when angry lawmakers proposed a series of ideas to recoup the money through higher taxes.

"If you don't return it on your own, we will do it for you," Sen. Chuck Schumer, D-N.Y., warned the employees who received bonuses.

The level of hostility rose after New York Attorney General Andrew Cuomo reported Tuesday in a letter to Congress that 73 individuals at AIG received bonuses of $1 million or more Friday, including 11 who have left the company. AIG has described the bonuses as "retention payments" to keep good workers.

"Eleven of them left the company; they took the money and ran," said Rep. Steve Israel, D-N.Y. "So much for the retention part of retention bonuses."

Several Senate Democrats, including Schumer, sent a letter to Liddy on Tuesday asking him to renegotiate the bonuses. If that does not happen, Sen. Max Baucus, D-Mont., chair of the Senate Finance Committee, said he will propose an excise tax on companies receiving bailout money and their employees who receive bonuses. The ranking Republican on the committee, Sen. Chuck Grassley, R-Iowa, says he backs the proposal.