AIG = 'arrogance, incompetence and greed?'
by Hibah Yousuf
Mar 18, 2009
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AIG CEO Edward Liddy's written testimonyThe insurance giant has received about $170 billion in bailout funds; public reaction was swift and harsh to the weekend news that many AIG executives received large bonuses. A House financial services subcommittee asked government officials, insurance experts and AIG Chairman Edward Liddy how AIG got into its current situation and “how to move forward.”
“Make no mistake. Had I been CEO at the time I would never have approved the retention contracts that were put in place over a year ago,” said Liddy, who took the helm at AIG six months ago on a $1 salary. Though he called the bonuses “distasteful,” Liddy also explained that he considered legal advice and how to “prevent an uncontrollable collapse” of the company.
Throughout the hearing, Liddy emphasized that AIG is operating “on behalf of American taxpayers so that we can maximize the amount of money we pay back to the government.” He said the company has been working closely with the Federal Reserve. A Fed representative sits on the AIG board and knew about the bonus payments, Liddy said, and Fed Chairman Ben Bernanke had been consulted all along.
Liddy said he has asked employees who have received more than $100,000 in bonuses to return at least half. He said some have already returned their bonuses in full, and he will update the committee and the public on progress on that front.
House Financial Services Committee Chairman Barney Frank asked Liddy to submit a list of employees who received bonuses and note those who did not return them.
Liddy asked if the list would remain confidential to protect the employees and read threats received against AIG executives.
While Frank said he will consult law enforcement about the “despicable” threats, he called the AIG situation is “an important public subject.”
Committee members also expressed fury when Orice Williams of the Government Accountability Office explained that the congressional investigative agency is prohibited from scrutinizing the Federal Reserve’s oversight of federal bailout funds. Such GAO authority would be beneficial “especially in this environment,” she said.
While the hearing was going on, President Barack Obama told reporters at the White House that he wants Congress to pass legislation giving the government more regulatory authority over companies like AIG.
Treasury Secretary Timothy Geithner and Bernanke will testify before the House Financial Services Committee next week.
