AIG has come under intense fire from the public, politicians, and President Barack Obama for accepting up to $180 billion in government aid and then handing out multimillion-dollar bonuses. CEO Edward Liddy said in remarks to a congressional committee that the “cold realities of competition” compelled the insurer to pay $165 million in bonuses, Reuters reported.
He also said that the best hope for recouping taxpayer money was to keep running AIG as a business.
According to Reuters, AIG has argued that 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 company to the brink of collapse last year.
Liddy, who took over as chairman and CEO six months ago when the government first stepped in to try to stabilize AIG, said the company had made mistakes “on a scale few could have ever imagined possible,” the Reuters said. No one disagreed, the New York Times reported.
However, even as Liddy defended the bonuses, he said during his testimony that he had asked some recipients to give at least half the money back.
“I have asked the employees of AIG Financial Products to step up and do the right thing,” Liddy told lawmakers, according to the New York Times. “Specifically, I have asked those who received retention payments of $100,000 or more to return at least half of those payments.” He also said that some recipients had already offered to give up all of their bonuses.
That did not seem to appease lawmakers. “We are the effective owners of this company,’ said Representative Barney Frank (D-Massachusetts), the chairman of the House Financial Services Committee, suggesting a lawsuit to recover the $165 million in bonuses. “I think it’s worth trying.’
Frank clarified that by “we’ he meant the American taxpayers.
Representative Paul Hodes, (D-New Hampshire) said that for the American people the initials “AIG’ now stand for “arrogance, incompetence, and greed.’
A copy of Liddy’s testimony is available here.