AIG bonuses: Some repaid, Congress to vote on tax

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(Agencies)
Updated: 2009-03-19 08:23

WASHINGTON – Under intense pressure from the Obama administration and Congress, the head of bailed-out insurance giant AIG declared Wednesday that some of the firm's executives have begun returning all or part of bonuses totaling $165 million.

Edward Liddy offered no details, and lawmakers were in no mood to wait. He was still fielding their questions when House Democratic leaders announced plans for a vote Thursday on legislation to tax away 90 percent of the extra pay for executives at AIG and many other bailed-out firms.

AIG CEO Edward Liddy interacts with protestors from the group "Code Pink" as he arrives to testify before the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises as they hold a hearing on "American International Group's Impact on the Global Economy: Before, During, and After Federal Intervention" on Capitol Hill in Washington, March 18, 2009. [Agencies]

Liddy, brought in last year to oversee a company that has received $182 billion in federal bailout money, said he, too, was angry about the bonuses. But he did not respond directly when advised in pungent terms to pay to the Treasury all the money handed out last weekend in "retention payments."

"Eat it now. Take it out of your profits down the road. It's a lot sweeter now than it's gonna be later," said Rep. Gary Ackerman, D-N.Y.

Liddy slid into the witness chair at a congressional hearing as President Barack Obama sought anew to quell a furor that has bedeviled his administration since word of the bonuses surfaced over the weekend.

Obama, who took office just under two months ago, told reporters his administration was not responsible for a lack of federal supervision of AIG that preceded the company's demise, nor for the decision made last year to pay what he called "outrageous bonuses."

Still, he said, "The buck stops with me." He said that "my goal is to make sure that we never put ourselves in this kind of position again," and he disclosed the administration was consulting with Congress on the possibility of creating a new agency to govern the meltdown of large financial institutions such as AIG.

He also gave a strong vote of confidence to Treasury Secretary Tim Geithner, who has been the target of growing Republican criticism.

Later, at a town hall meeting in Costa Mesa, Calif., Obama said that while his administration was addressing the AIG bonuses specifically, he said he wanted to "make sure we dont find ourselves in this situation again, where taxpayers are on the hook for losses in bad times and all the wealth generated in good times goes to those at the very top."

Obama spoke as congressional Democrats worked on legislation designed to recoup most or all of the $165 million by exposing it to new taxes.

Rep. Charles Rangel, D-N.Y., chairman of the tax-writing House Ways and Means Committee, said the new 90 percent tax would apply to bonus money paid to employees earning more than $250,000 at firms that have received more than $5 billion in federal bailout funds. Mortgage giants Fannie Mae and Freddie Mac are covered under the proposal.

Liddy said that on Tuesday, he had "asked those who have received retention payments in excess of $100,000 or more to return at least half of those payments." Some have "already stepped forward and returned 100 percent," he added.

Majority Leader Steny Hoyer, D-Md., said the House bill would be voted on under rules requiring a two-thirds majority for passage. Democrats are in comfortable control of the House but do not control two-thirds of the seats, meaning the outcome of the vote would probably be determined by tax-averse Republicans.

Republicans raised pointed questions about the extent of Geithner's advance knowledge of the bonuses, and stressed they had been locked out of discussions earlier this year when Democrats decided to jettison a provision from legislation that could have revoked the payments.

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