Seeking Disclosure of Bonus Contract Timing

This week, it was reported that an additional $100 million in bonus awards are being given to executives of the American International Group, or AIG.  Since 2008, taxpayers have provided $182 billion to keep afloat the insurance corporation.

It seems like AIG has taxpayers over a barrel, and the administration has been outmaneuvered.  The closed-door negotiations over the bonuses just add to the skepticism that taxpayers will ever get the upper hand.

The administration’s Special Master for Compensation, a Treasury Department official, defended the bonuses by saying the bonus contracts with executives binding because they were entered into before the federal government bailout in 2008. However, it’s my understanding that some of the retention bonus agreements were signed in September 2008, after the Federal Reserve pumped billions of dollars into AIG, and that some of the retention bonus agreements were signed in October 2008, after the passage of the Troubled Assets Relief Program, or TARP.  Even the agreements signed earlier could potentially be invalid if insiders knew that bankruptcy or a bailout was just around the corner.  The government should get those facts before approving any more bonus payments.

So, I’ve asked the Treasury Secretary why, at a minimum, should taxpayers be asked to honor contracts executive in September and October of 2008, after AIG began receiving billions in taxpayer support.  I also asked for an accounting of the administration’s efforts to follow through on the President’s pledge to “pursue every single legal avenue to block these bonuses and make the American taxpayers whole.”  And, I asked for information about what has been done to determine the role that bonus recipients may have played in decisions that contributed to the losses that threatened to bring down AIG and, according to some views, the entire financial system.