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More information is coming into the light about why executives in the financial products division of AIG have been paid $165 million in retention bonuses. And it is becoming clear how those bonuses were exempted from the strict executive compensation controls that the president promised.
The chairman of AIG told the House Finance Committee he hated to pay out $165 million in bonuses to some of the same people who helped wreak AIG, but withholding the money would've been worse.
"Had we done that more than likely those people would've walked out the door tomorrow or whenever, and we would've had this $1.6 trillion book of business which needs to be managed everyday with no one to manage it," said Edward Liddy, the chairman of AIG.
Liddy says the deals inside the company's financial products division are so complicated, only the people inside can be relied on to unwind them.
"I'm trying desperately to prevent an uncontrolled collapse of that business. This is the only way to improve AIG's ability to pay taxpayers back quickly and completely," said Liddy.
Liddy added that he's asked those who received the bonuses to give back at least half, and some have, but members of the House committee were not persuaded.
"This old school teacher is going to give you a little bit of advice… pay the $165 million back," said Representative Gary Ackerman (D) of New York.
"Right now AIG is owned by the tax payers of this country, until the $70 billion is returned, nobody in my view, should be getting retention bonuses or performance bonuses, until that money is paid back," said Representative Jackie Speier (D), of San Mateo.
Democratic members of Congress hammered Liddy. ABC News revealed that in closed door negotiations between the White House and congressional leaders, a provision that would've limited AIG bonuses was removed from the recently signed stimulus bill and in its place a provision from Senator Dodd (D) of Connecticut.
His statement said, "Any limitation on executive pay, shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11th 2009." In other words, it is exactly the language necessary to allow those AIG bonuses.
A congressional aide told ABC7 the White House wanted that changed, out of fear that limiting bonuses might spook the stock market or the banks. On Wednesday the president said only that he's ultimately responsible.
"The buck stops with me and my goal is to make sure that we never put ourselves in this kind of position again," said President Obama.
The president hasn't faced tough questions about the Dodd provision in the stimulus bill, but Senator Dodd is certainly getting hammered. Wednesday he said he was sorry and that he wrote the prevision together with the Obama Administration.
Dodd received more money from AIG last year than any other elected official. The list of the top recipients is below. They include the president and his former Republican rival John McCain of Arizona.
Here is a list, courtesy of Opensecrets.org, of the top recipients of AIG political contribution money. AIG gave out more than $360,000 in 2008.
- Dodd, Chris (D-CT) Senate $103,100
- Obama, Barack (D-IL) Senate $101,332
- McCain, John (R-AZ) Senate $59,499
- Clinton, Hillary (D-NY) Senate $35,965
- Baucus, Max (D-MT) Senate $24,750
- Romney, Mitt (R) Pres $20,850
- Biden, Joseph R. Jr. (D-DE) Senate $19,975
- Larson, John B (D-CT) House $19,750
- Sununu, John E (R-NH) Senate $18,500
- Giuliani, Rudolph W (R) Pres $13,200
- Kanjorski, Paul E (D-PA) House $12,000
- Durbin, Dick (D-IL) Senate $11,000
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