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• The insurance and financial service company American International Group paid $450 million in bonuses to current and former employees on March 13, 2009, despite the company's receipt of a government bailout. Initial reports estimated bonuses at the insurance giant to be $232 million. However, further investigation revealed figures much higher than initial estimate, New York News.Twitter: BreakingNewsOn

  On July 9, 2009, it was reported that AIG will pay out several millions more in bonuses to top executives soon. According to reports, the company has asked the government to express their support of the payments. The bonuses, like the ones paid out earlier this year, are required by contracts written before the company received federal bailout money.http://www.washingtonpost.com/wp-dyn/content/article/2009/07/09/AR2009070902702.html

• Fast Facts

  1. AIG has received over $170 billion in funding from the federal government
  2. Has paid out bonuses to employees several times after receiving the fundsCNN Money: 73 At AIG Received Bonuses Of $1 Million Or More (March 17, 2009)
  3. 73 employees or former employees of the AIG Financial Products has received over $1 million each in bonusesCNN Money: 73 At AIG Received Bonuses Of $1 Million Or More (March 17, 2009)
  4. The division has been blamed for the financial crisis of the company in 2008CNN Money: 73 At AIG Received Bonuses Of $1 Million Or More (March 17, 2009)
  5. 11 of those from AIG Financial Products who received bonuses have left the companyCNN Money: 73 At AIG Received Bonuses Of $1 Million Or More (March 17, 2009)
  6. More bonuses will reportedly be paid out during the week of July 13, 2009
  7. AIG says it was obligated by contracts to pay out the bonusesCNN Money: 73 At AIG Received Bonuses Of $1 Million Or More (March 17, 2009)
  8. The top 10 recipients received a total of $42 million in the March 13, 2009 payoutCNN Money: 73 At AIG Received Bonuses Of $1 Million Or More (March 17, 2009)
  9. Highest bonus paid out to one person: $6.4 millionCNN Money: 73 At AIG Received Bonuses Of $1 Million Or More (March 17, 2009)
  10. The current CEO of AIG, Edward Liddy, took office in September 2008 and did not write the contracts that include the bonusesBloomberg: Geithner Vows to Recoup AIG Bonuses as Lawmakers Express Fury (March 18, 2009)
  11. Liddy testified before a subcommittee of the House Financial Services Committee on March 18, 2009Bloomberg: Geithner Vows to Recoup AIG Bonuses as Lawmakers Express Fury (March 18, 2009)

• Threats

  Andrew Cuomo, the attorney general of New York, subpoenaed AIG to find out who received bonuses.San Francisco Chronicle: Once paid, AIG bonuses will be hard to recover (March 17, 2009) He received the list on March 19. However, before making the list public, Cuomo has vowed to ensure for the safety of these employees. That same day, the blog Gawker published an internal AIG memo containing safety tips for employees who feel threatened by the anger and bitterness of the public toward the company. These tips include not giving out personal information on the phone or via e-mail and not wearing any AIG-branded apparel or badges outside of the office.Gawker: AIG Corporate Security's Tips for Surviving an Angry Mob (March 19, 2009)

• Reactions

  The decision to pay the bonuses despite the fact that the financially troubled company has received over $170 billion in federal rescue funds was met with outrage by some. Some lawmakers have proposed taxes of a total of 70% or more on the bonuses and similar bonuses from companies receiving federal money.Bloomberg: Geithner Vows to Recoup AIG Bonuses as Lawmakers Express Fury (March 18, 2009) President Barack Obama has declared that his administration will attempt to block the payments of the bonuses. AIG has said it was contractually obligated to pay the bonuses.CNN Money: 73 At AIG Received Bonuses Of $1 Million Or More (March 17, 2009)

  In a letter to lawmakers on March 17, 2009, Treasury Secretary Timothy Geithner said that the government will require that AIG pay an amount equal to the bonuses to the Treasury Department. Geithner said that the government also will deduct the amount from the $30 billion AIG was awarded in a federal loan in March.Bloomberg: Geithner Vows to Recoup AIG Bonuses as Lawmakers Express Fury (March 18, 2009)

  On March 19, New York's Attorney General, Andrew Cuomo, announced that he had received a list of AIG employees who received bonuses following the government bailout. He will compile a "risk assessment" of threats to the executives before making any names public.MSNBC: Cuomo Receives Bonus Info Today (March 19, 2009) Douglas Poling, an AIG exec, has publicly promised to return his bonus to the company. Poling received the largest bonus at $6.4 million.Huffington Post: Douglas Poling ... will return payment (March 19, 2009)

  The same day, the U.S. House of Representatives voted to approve a 90 percent tax on employee bonuses from AIG and of other companies receiving federal bonuses. The bonus will apply to employees who make over $250,000 a year. The decision needs to be approved by the U.S. Senate.Bloomberg: U.S. House Passes 90 Percent Tax on Employee Bonuses (March 19, 2009)

• Return of Bonuses

  New York Attorney General Andrew Cuomo, has announced that nine of the top 10 bonus getters at the embattled financial giant will be returning their bonuses in full. Cuomo stated that the returns will total approximately $50 million. He is seeking to recoup upwards of $80 million in bonuses paid to executives and stated that 15 of 20 top bonus earners agreed to return the money.CBSNews.com: Top AIG Bonus Receivers Returning The Cash (March 23, 2009)Newsday: 15 of 20 top AIG employees agree to return bonuses (March 24, 2009)

• Liddy's Testimony

  Liddy testified before a subcommittee of the House Financial Services Committee on March 18, 2009. Bloomberg: Geithner Vows to Recoup AIG Bonuses as Lawmakers Express Fury (March 18, 2009) In his testimony, Liddy said that the company was required by contracts to pay out the bonuses. He said that he had asked most of the people who received bonuses to repay half of the money or more. He warned that some employees might resign when asked to return the money which would cause instability in the company. He also said that he was reluctant to name people who received bonuses because of death threats the company has received against those who were awarded the money.Marketwatch: AIG CEO, some staff get death threats over bonuses (March 18, 2009)

• Knowledge of Bonuses

  Although Treasury Secretary Timothy Geithner and Barack Obama were not aware of the bonuses that were paid out on March 13, 2009 until the week of March 11th, members of Congress and the Obama administration were aware of AIG's plans to pay out high bonuses as long ago as November 2008 and that the bonuses were written into contracts. Washington put pressure on AIG president Edward Liddy to curtail the bonuses, but he was told by legal experts that the bonuses were contractually required. If AIG cut back on the bonuses, then the employees could successfully sue for the bonuses to be paid.Associated Press: Obama, Congress knew about AIG bonuses for months (March 17, 2009)

• AIG Bailout

  AIG suffered great financial losses in 2008 and in September it was reported it might need to file for bankruptcy.Wall Street Journal: AIG Scrambles to Raise Cash, Talks to Fed (September 15, 2008) MarketWatch: AIG slumps; insurer reportedly seeks Fed support (September 15, 2008) On September 16, 2008, the Federal Reserve granted the company an $85 billion loan in exchange for an 80% stake in AIG. The New York Times: Fed to Give AIG $85B Loan and Take 80% Stake (September 16, 2008) The loan was later increased to $150 billion.ABC News: AIG in Talks With U.S. Government, Sees $60 Billion Loss... (February 24, 2009) AIG was awarded an additional $30 billion in March 2009.Los Angeles Times: Feds give AIG $30 billion more (March 2, 2009)

• Jake DeSantis Resignation

  On March 24, 2009, Jake DeSantis, a vice president in the financial products unit of AIG, resigned. His resignation letter was published in New York Times the next day. In this letter, he said that he and others in the unit had been unfairly blamed for the "credit default swap transactions" at AIG and that those responsible had left the company. He said it was unfair to ask employees to return the bonuses and that he would instead donate the money to "organizations that are helping people who are suffering from the global downturn".The New York Times: Dear A.I.G., I quit! (March 24, 2009)

• Related Pages on Mahalo

  American International Group | Barack Obama | Timothy Geithner | Chuck Grassley | Barney Frank | Andrew Cuomo | Jake DeSantis | New York News

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