AIG CEO asks employees to repay some bonus money

WASHINGTON, (Reuters) – The head of AIG said yesterday he was trying desperately to prevent the company from  collapsing when he allowed the payment of $165 million in  bonuses that have stoked outrage stretching from the White  House to Main Street.

Edward Liddy, who took over as chairman and chief executive  of American International Group Inc in September when the  government stepped in with the first of a series of rescues,  said he had asked employees receiving more than $100,000 in  bonuses to repay at least half.

“Americans are asking quite simply, Why pay these people  anything at all?” Liddy told a House of Representatives  subcommittee. “Here’s why: I am trying desperately to prevent  an uncontrolled collapse of that business.”

Liddy said some employees had already given back their  entire bonuses. Some had taken payouts and left the company.

AIG has drawn intense fire from the public, politicians and  President Barack Obama for accepting up to $180 billion in  government aid and then handing out fat bonuses — including  some worth $1 million or more paid out to 73 people.

Liddy said the payouts were necessary to retain top  employees with the specialized knowledge to dispose of $2.7  trillion in complex securities that ended up dragging the  insurer to the brink of collapse last year.

He said the company had whittled down that amount to $1.6  trillion, and he was worried that employees responsible for  winding down the rest would return their bonuses “with their  letters of resignation,” which would make the task tougher.

“It just got harder by many, many multiples,” he said.

Fury over the bonuses threatens to undermine Obama’s  efforts to solve the credit crisis and pull the economy out of  a deep recession. He has said he might have to ask Congress for  money beyond a $700 billion bailout fund approved in October.

“People are right to be angry. I’m angry,” Obama said yesterday.

Many voters view the financial rescues as free handouts to  wealthy executives who made bad decisions, and the big bonuses  have fueled that anger.

“It is morally reprehensible and fiscally irresponsible to  expect bonus money for bringing a corporate giant to its  knees,” Democratic Representative Carolyn Maloney said.

Another Democrat, Representative Paul Hodes, quipped that  AIG stood for “arrogance, incompetence and greed.”

But there was some concern that the firestorm in Washington  would turn off the big private investors, such as hedge funds,  the government needs to help stabilize the financial system.

Channeling the populist sentiment, several Democrats and  Republicans in Congress sought to force AIG to disclose details  about the bonuses, and proposed taxing them so heavily that the  recipients could wind up with nothing.

Representative Barney Frank, the Democrat who chairs the  House Financial Services Committee, pressed Liddy to release  the names of those who received bonuses and said he intended to  subpoena the information.

Liddy refused, citing concerns for the safety of his  employees, and read aloud what he said were examples of death  threats that had been received.

Separately, three Republicans asked the Senate Banking  Committee to subpoena for documents related to the bonuses, and  the House Judiciary Committee approved legislation aimed at  recovering the money.

New York Attorney General Andrew Cuomo, who has subpoenaed  AIG for a list of those who received bonuses, said asking  employees to give back half the money was “too little too late”  and would cover only 298 of 418 bonus recipients.

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