WASHINGTON, DC- Following the disclosure of the bonuses paid to AIG executives, U.S. Senator Bob Casey (D-PA) has told AIG that they have an opportunity to be responsive to their new stakeholders and do the right thing by forgoing their bonuses. In the letter to AIG CEO Edward Liddy, Senator Casey called on Liddy to ask executives to give back their bonuses or be fired.
"It is unquestionable however that payment of these bonuses would lavishly reward some of the very individuals responsible for the near collapse of AIG," Senator Casey wrote. "This action would be a direct insult to taxpayers who have contributed $170 billion to avert this collapse and are now the company’s owners."
Senator Casey added, "It is difficult to quantify the outrage from taxpayers – AIG's new shareholders. If AIG doesn’t reverse course and do the right thing all other options, including legislative action, must be examined to recoup these bonuses."
A copy of the letter is attached.
March 17, 2009
Mr. Edward M. Liddy
Chairman and CEO
American International Group, Inc.
70 Pine Street
New York, NY 10270
Dear Mr. Liddy:
I write today to convey my outrage over American International Group’s (AIG’s) payout of $165 million in bonuses to executives in its Financial Products division. As you know, this unit wrote trillions of dollars of credit default swaps, leading to the near collapse of AIG and necessitating the infusion of $170 billion in federal assistance. Under these circumstances, it defies all logic that these executives deserve to receive millions of dollars in performance-based bonus payments.
As the company faced imminent collapse, the government assumed an 80 percent stake in AIG. Accordingly, its new owners- namely taxpayers- have a right to know how their money is being spent. Therefore, I ask you to provide detailed information regarding the performance of all executives in the Financial Products division receiving bonuses, including specific information about their involvement with credit default swaps and other risky derivatives. Echoing the requests of the New York Attorney General, I believe AIG must provide a list of payment recipients, position, job description and summary of performance at AIG financial products.
Let me be clear—given AIG’s reported a loss of $61.7 billion for the final quarter of 2008, I find it inconceivable that these bonuses could be warranted based on any fair or rational metric of executive performance. However, I also understand that contracts are in place that may require these bonuses to be paid notwithstanding AIG’s recent dismal financial performance.
While it is questionable whether AIG exercised reasonable judgment when it entered into these contracts in early 2008, I recognize this is now water over the dam. It is unquestionable however that payment of these bonuses would lavishly reward some of the very individuals responsible for the near collapse of AIG. This action would be a direct insult to taxpayers who have contributed $170 billion to avert this collapse and are now the company’s owners.
Considering these facts, I think it appropriate that executives in AIG’s Financial Products division be asked to forgo their bonuses. If they are unwilling to do so, they should be fired. The taxpayers cannot trust those who profit from their own poor decisions to effectively turn around the company.
Thank you for considering my requests. I urge you to act quickly. AIG’s survival is contingent on the support of the American people. Without swift action on your part, I fear that we will no longer be in a position to provide future assistance.
Robert P. Casey
United States Senator