Feingold on AIG: "The best and the brightest"?

In a letter to Tim Geithner, the senator calls for legal action to recover $165 million that went to bonuses.


Salon Staff
March 16, 2009 7:34PM (UTC)

FEINGOLD PRESSES ADMINISTRATION TO EXPLORE LEGAL OPTIONS TO CANCEL AIG BONUSES

Insurance Giant Intends to Pay $165 Million in Bonuses to Executives After Receiving Bailout Funds and Despite Abysmal Performance 

Washington, D.C. – U.S. Senator Russ Feingold is urging the Obama administration to explore legal options to cancel $165 million in bonuses the American International Group (AIG) intends to pay its executives, despite receiving taxpayer-funded bailout money. In a letter to Treasury Secretary Timothy Geithner, Feingold requested to know what legal options have been explored for canceling the bonuses, recouping the money from the recipients, or suing the executives for breaching their fiduciary duties to AIG shareholders. 

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“As you know, the federal government has provided AIG with $170 billion in taxpayer money and currently owns 80% of the company,” Feingold wrote. “I share your outrage that a company which has been bailed out by the taxpayers for its mistakes would turn around and pay its executives such a staggering sum of money.”

Feingold, who voted against the Wall Street bailout, also questioned AIG’s defense of the bonuses. As reported in the New York Times, AIG’s government-appointed chairman, Edward Liddy, claimed in a letter to Geithner that the bonuses are needed because otherwise, AIG “…cannot attract and retain the best and the brightest talent to lead and staff the AIG businesses.”

“Since some of the recipients of these bonuses may have been responsible for the practices that drove the company to the brink of collapse – jeopardizing the financial system – I am sure many Americans will question whether they are indeed “the best and the brightest” and whether they deserve this level of taxpayer-subsidized compensation,” Feingold wrote.

A copy of the letter is below.

March 15, 2009

The Honorable Timothy Geithner  

Secretary of the Treasury

Department of the Treasury

1500 Pennsylvania Avenue, N.W.  

Washington, DC 20220

Dear Mr. Secretary:

I deeply troubled by reports that the American International Group (AIG) intends to pay about $165 million in bonuses to its executives. As you know, the federal government has provided AIG with $170 billion in taxpayer money and currently owns 80% of the company. I share your outrage that a company which has been bailed out by the taxpayers for its mistakes would turn around and pay its executives such a staggering sum of money.

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Reports suggest that AIG’s chairman claims AIG is legally obligated to pay some or all of these bonuses. I write to ask why any bonuses would be legally required, given the company’s abysmal performance. In addition, I would like to know what legal options have been explored for canceling the bonuses or recouping the money from the recipients, and in particular whether the Administration has considered holding AIG executives accountable in court for any breaches of their fiduciary duties to the shareholders.

Reports also suggest that AIG’s chairman claimed that the bonuses are needed to ensure the company can “attract and retain the best and the brightest talent to lead and staff the AIG businesses.” Since some of the recipients of these bonuses may have been responsible for the practices that drove the company to the brink of collapse – jeopardizing the financial system – I am sure many Americans will question whether they are indeed “the best and the brightest” and whether they deserve this level of taxpayer-subsidized compensation. 

I look forward to your prompt response.

Sincerely,

Russell D. Feingold

United States Senator


Salon Staff

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