Source: http://news.yahoo.com/s/afp/20090318/ts_alt_afp/uspoliticsinsurancepublicaidaig_20090318015616
WASHINGTON (AFP) – US Treasury Secretary Timothy Geithner said that the government would work with AIG chief executive Edward Liddy to "wind down" the troubled insurer "in an orderly way."
In a letter to lawmakers Geithner addressed what he described as "considerable outrage" stemming from 160-million-dollar bonuses paid to AIG top executives, and said his department would "explore any and all responsible ways to accelerate this wind down process."
He said he would "work with" AIG chief executive Edward Liddy "on measures to wind down AIG in an orderly way and protect the American taxpayer."
AIG, which received billions in US bailout funds, is also to pay back the government for the hefty bonuses shelled out to top executives, Geithner said.
Geithner's statement comes as revelations about the staggering bonuses which were awarded to employees of the giant US insurer fueled a political firestorm.
The controversy engulfing bailed-out American International Group threatened to turn nasty amid reports of death threats against AIG workers, and posed a critical test of President Barack Obama's economic revival plans.
Lawmakers had been looking at punitive tax measures to reclaim the bonuses paid largely to the same London-based financial products traders who brought ruin to AIG and helped to ignite the global financial crisis.
Senator Charles Grassley, the top Republican on the Senate Finance Committee, refused to disavow a remark that AIG executives should go the way of disgraced Japanese leaders in choosing resignation or suicide.
The Iowa lawmaker declared that "from my standpoint, it's irresponsible for corporations to give bonuses at this time, when they're sucking the tit of the taxpayer."
New York Attorney General Andrew Cuomo disclosed that last Friday, AIG had paid out more than 160 million dollars in bonuses to staff at its financial products unit.
Cuomo, who slapped subpoenas on AIG Monday as part of a probe into Wall Street excess, said 73 AIG employees had each received bonuses of one million dollars or more.
The top 10 recipients were paid a total of 42 million dollars, with one executive getting 6.4 million alone. And 11 executives quit AIG despite being paid "retention" bonuses of at least a million dollars each to stay.
Government-appointed AIG boss Edward Liddy, who faces a grilling at a forthcoming congressional hearing, was sent a letter from Senate Democrats demanding he renegotiate the employees' bonuses or else legislation would be pushed through to tax them at more than 90 percent.
"Given the fact that it was the employees in this unit that brought your firm to the brink of bankruptcy and caused such havoc in the world, rewarding them is not only morally reprehensible, but entirely indefensible on any business grounds," the letter said.
AIG was saved from bankruptcy last September because the government deemed its intricate web of ties with banks worldwide posed an imminent risk of financial meltdown not just for the United States but globally.
With Treasury Secretary Timothy Geithner accused of bungling the controversy, White House spokesman Robert Gibbs meanwhile said Obama had "complete confidence" in his economic overseer.
Gibbs added that "everybody is offended by every aspect" of the bonuses at a time when millions of Americans have lost their jobs in the worst recession for decades.
Republicans turned up the political heat on Obama, who must ride the public fury against Wall Street while shoring up congressional support for forthcoming measures to prop up tottering banks.
House Minority Leader John Boehner said Republicans had long been calling for more protections to ensure that taxpayers know how 700 billion in bailout dollars are being spent by financial institutions.
"It is time for the administration to provide Congress and American taxpayers an exit strategy that will get the federal government out of the private sector and out of the bailout business," he said.
Barney Frank, the Democratic chairman of the House Financial Services Committee, noted that the US taxpayer now controls 80 percent of AIG's equity after pumping 180 billion dollars into the company.
"I think the time has come to exercise our ownership rights," he said, as a new poll by CNN and Opinion Research Corp. showed strong public support for the outright nationalization of distressed banks.
WASHINGTON (AFP) – US Treasury Secretary Timothy Geithner said that the government would work with AIG chief executive Edward Liddy to "wind down" the troubled insurer "in an orderly way."
In a letter to lawmakers Geithner addressed what he described as "considerable outrage" stemming from 160-million-dollar bonuses paid to AIG top executives, and said his department would "explore any and all responsible ways to accelerate this wind down process."
He said he would "work with" AIG chief executive Edward Liddy "on measures to wind down AIG in an orderly way and protect the American taxpayer."
AIG, which received billions in US bailout funds, is also to pay back the government for the hefty bonuses shelled out to top executives, Geithner said.
Geithner's statement comes as revelations about the staggering bonuses which were awarded to employees of the giant US insurer fueled a political firestorm.
The controversy engulfing bailed-out American International Group threatened to turn nasty amid reports of death threats against AIG workers, and posed a critical test of President Barack Obama's economic revival plans.
Lawmakers had been looking at punitive tax measures to reclaim the bonuses paid largely to the same London-based financial products traders who brought ruin to AIG and helped to ignite the global financial crisis.
Senator Charles Grassley, the top Republican on the Senate Finance Committee, refused to disavow a remark that AIG executives should go the way of disgraced Japanese leaders in choosing resignation or suicide.
The Iowa lawmaker declared that "from my standpoint, it's irresponsible for corporations to give bonuses at this time, when they're sucking the tit of the taxpayer."
New York Attorney General Andrew Cuomo disclosed that last Friday, AIG had paid out more than 160 million dollars in bonuses to staff at its financial products unit.
Cuomo, who slapped subpoenas on AIG Monday as part of a probe into Wall Street excess, said 73 AIG employees had each received bonuses of one million dollars or more.
The top 10 recipients were paid a total of 42 million dollars, with one executive getting 6.4 million alone. And 11 executives quit AIG despite being paid "retention" bonuses of at least a million dollars each to stay.
Government-appointed AIG boss Edward Liddy, who faces a grilling at a forthcoming congressional hearing, was sent a letter from Senate Democrats demanding he renegotiate the employees' bonuses or else legislation would be pushed through to tax them at more than 90 percent.
"Given the fact that it was the employees in this unit that brought your firm to the brink of bankruptcy and caused such havoc in the world, rewarding them is not only morally reprehensible, but entirely indefensible on any business grounds," the letter said.
AIG was saved from bankruptcy last September because the government deemed its intricate web of ties with banks worldwide posed an imminent risk of financial meltdown not just for the United States but globally.
With Treasury Secretary Timothy Geithner accused of bungling the controversy, White House spokesman Robert Gibbs meanwhile said Obama had "complete confidence" in his economic overseer.
Gibbs added that "everybody is offended by every aspect" of the bonuses at a time when millions of Americans have lost their jobs in the worst recession for decades.
Republicans turned up the political heat on Obama, who must ride the public fury against Wall Street while shoring up congressional support for forthcoming measures to prop up tottering banks.
House Minority Leader John Boehner said Republicans had long been calling for more protections to ensure that taxpayers know how 700 billion in bailout dollars are being spent by financial institutions.
"It is time for the administration to provide Congress and American taxpayers an exit strategy that will get the federal government out of the private sector and out of the bailout business," he said.
Barney Frank, the Democratic chairman of the House Financial Services Committee, noted that the US taxpayer now controls 80 percent of AIG's equity after pumping 180 billion dollars into the company.
"I think the time has come to exercise our ownership rights," he said, as a new poll by CNN and Opinion Research Corp. showed strong public support for the outright nationalization of distressed banks.
