<TABLE cellSpacing=0 cellPadding=0 width=452 border=0><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published March 19, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>US will recoup AIG bonuses, Geithner tells Congress
Govt requires money to be repaid from company operations
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</TD><TD>Feedback</TD></TR></TBODY></TABLE>(NEW YORK) Treasury Secretary Timothy Geithner told congressional leaders the US will recoup executive bonuses paid by American International Group as outraged lawmakers raced to take back such payments from all companies getting federal bailouts.
<TABLE cellSpacing=0 cellPadding=5 align=left border=0><TBODY><TR><TD bgColor=#ffffff>[FONT=Geneva, Helvetica, Verdana, Arial, sans-serif]<!-- REPLACE EVERYTHING IN CAPITALS WITH YOUR OWN VALUES --><TABLE class=quoteBox cellSpacing=0 cellPadding=0 width=144 align=left border=0><TBODY><TR><TD vAlign=bottom>
</TD></TR><TR><TD bgColor=#fffff1><TABLE cellSpacing=0 cellPadding=0 width=124 align=center border=0><TBODY><TR><TD vAlign=top>'Millions lost their jobs; it's an outrage that the people who somewhat caused this problem are now paying themselves bonuses.'
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</TD></TR></TBODY></TABLE></TD></TR></TBODY></TABLE>Mr Geithner, who has come under fire from Congress over the AIG payments, said in a letter to lawmakers on Tuesday the government will recover the money by requiring it be repaid from company operations and deducting the amount from the next US$30 billion in aid being provided to the insurer. He also said the government will work to accelerate the 'wind down' process of restructuring AIG.
The senior members of the Senate Finance Committee from both parties proposed taxes totalling 70 per cent on bonuses at AIG and other companies getting federal money during the US financial meltdown.
House Speaker Nancy Pelosi directed committees there to draft several alternatives and said her chamber may consider a bill as early as this week. Other lawmakers introduced their own plans.
On Monday, President Barack Obama expressed his unhappiness with the bonuses and directed government lawyers to review the company's contracts to determine whether provisions guaranteeing the payments could be overturned.
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</TD></TR></TBODY></TABLE>On Tuesday, White House press secretary Robert Gibbs said that Mr Obama was open to the idea of a special tax on the bonuses, along with other options that lawmakers were floating, including legal action against AIG.
'Obviously, the president is committed to working as quickly as possible with Congress to find ways to recoup this money.'
Senior White House officials said that Mr Obama did not learn that US$165 million in bonuses were to be paid to executives of AIG until Thursday, one day before they were issued and two days after his Treasury secretary was informed that the payments were going ahead.
Obama aides defended Mr Geithner's handling of the situation, with Mr Gibbs saying that the president has 'complete confidence' in the Treasury chief. Last week, the administration persuaded the company to restructure some of the payments, and AIG's top seven executives had earlier agreed to forgo their bonuses this year.
New York-based AIG paid US$165 million in executive bonuses after taking taxpayer-funded bailouts totalling US$173 billion. AIG also budgeted US$57 million in 'retention' pay for employees who will be dismissed, according to a March 2 filing with the Securities and Exchange Commission.
'Millions lost their jobs; it's an outrage that the people who somewhat caused this problem are now paying themselves bonuses,' Senate finance chairman Max Baucus, a Montana Democrat, said on Tuesday in Washington.
He and ranking Republican Chuck Grassley of Iowa also proposed limiting some forms of deferred compensation to US$1 million at companies getting bailout funds.
AIG chief executive officer Edward Liddy testified yesterday before a sub-committee of the House Financial Services Committee. Panel chairman Barney Frank said on Tuesday that the government has a stronger legal case to reclaim the AIG bonuses now that the government owns a majority of the company.
'I think the time has come to exercise our ownership rights,' Mr Frank told reporters. 'And then say, as owner, 'No, I'm not paying you the bonus. You didn't perform. You didn't live up to this contract'.'
Mr Geithner's letter said that Treasury lawyers had determined that it would be 'legally difficult' to prevent AIG from paying the bonuses because they were required by contracts.
He also said that criticism of Mr Liddy is 'unjustified' because the contracts were in place before he took over at the company last year. -- Bloomberg, LAT-WP
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</TD></TR><TR><TD vAlign=top width=452 colSpan=2>US will recoup AIG bonuses, Geithner tells Congress
Govt requires money to be repaid from company operations
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</TD><TD>Feedback</TD></TR></TBODY></TABLE>(NEW YORK) Treasury Secretary Timothy Geithner told congressional leaders the US will recoup executive bonuses paid by American International Group as outraged lawmakers raced to take back such payments from all companies getting federal bailouts.<TABLE cellSpacing=0 cellPadding=5 align=left border=0><TBODY><TR><TD bgColor=#ffffff>[FONT=Geneva, Helvetica, Verdana, Arial, sans-serif]<!-- REPLACE EVERYTHING IN CAPITALS WITH YOUR OWN VALUES --><TABLE class=quoteBox cellSpacing=0 cellPadding=0 width=144 align=left border=0><TBODY><TR><TD vAlign=bottom>
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- Senate Finance Committee chairman Max Baucus
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The senior members of the Senate Finance Committee from both parties proposed taxes totalling 70 per cent on bonuses at AIG and other companies getting federal money during the US financial meltdown.
House Speaker Nancy Pelosi directed committees there to draft several alternatives and said her chamber may consider a bill as early as this week. Other lawmakers introduced their own plans.
On Monday, President Barack Obama expressed his unhappiness with the bonuses and directed government lawyers to review the company's contracts to determine whether provisions guaranteeing the payments could be overturned.
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'Obviously, the president is committed to working as quickly as possible with Congress to find ways to recoup this money.'
Senior White House officials said that Mr Obama did not learn that US$165 million in bonuses were to be paid to executives of AIG until Thursday, one day before they were issued and two days after his Treasury secretary was informed that the payments were going ahead.
Obama aides defended Mr Geithner's handling of the situation, with Mr Gibbs saying that the president has 'complete confidence' in the Treasury chief. Last week, the administration persuaded the company to restructure some of the payments, and AIG's top seven executives had earlier agreed to forgo their bonuses this year.
New York-based AIG paid US$165 million in executive bonuses after taking taxpayer-funded bailouts totalling US$173 billion. AIG also budgeted US$57 million in 'retention' pay for employees who will be dismissed, according to a March 2 filing with the Securities and Exchange Commission.
'Millions lost their jobs; it's an outrage that the people who somewhat caused this problem are now paying themselves bonuses,' Senate finance chairman Max Baucus, a Montana Democrat, said on Tuesday in Washington.
He and ranking Republican Chuck Grassley of Iowa also proposed limiting some forms of deferred compensation to US$1 million at companies getting bailout funds.
AIG chief executive officer Edward Liddy testified yesterday before a sub-committee of the House Financial Services Committee. Panel chairman Barney Frank said on Tuesday that the government has a stronger legal case to reclaim the AIG bonuses now that the government owns a majority of the company.
'I think the time has come to exercise our ownership rights,' Mr Frank told reporters. 'And then say, as owner, 'No, I'm not paying you the bonus. You didn't perform. You didn't live up to this contract'.'
Mr Geithner's letter said that Treasury lawyers had determined that it would be 'legally difficult' to prevent AIG from paying the bonuses because they were required by contracts.
He also said that criticism of Mr Liddy is 'unjustified' because the contracts were in place before he took over at the company last year. -- Bloomberg, LAT-WP
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