AIG Chief Faces Grilling On Capitol Hill Over Bonuses

The head of American International Group acknowledged Wednesday that U.S. taxpayers' patience was "wearing thin" but that his hands were tied by competitive realities, as he faces angry lawmakers over why at least $165 million in retention bonuses were given out even as the company received billions in government bailout funds. AIG Chairman and CEO Edward Liddy said in prepared testimony that "mistakes were made at AIG on a scale few could have ever imagined possible."

Seeking To Recover Bonus Money

Senate Democrats wrote a letter to Liddy on Tuesday demanding that he rescind the bonuses.

In the House, two bills were introduced specifically targeting the AIG bonuses. The bills would slap hefty excise taxes on the payments in an effort to recover at least some of the money. Rep. Barney Frank, chairman of the Financial Services Committee, said he hopes a Depression-era law that allowed $85 billion in Federal Reserve money to go to AIG could be rewritten by Congress to allow legislative oversight. "The federal government is a major owner of this company. We're the owners, not just the regulators," Frank (D-MA) said Wednesday on CBS's The Early Show.

According to documents provided by AIG to the Treasury Department, the awards ranged from $1,000 to nearly $6.5 million. Seven employees were to receive more than $3 million. Liddy, who was tapped last year by then-Treasury Secretary Henry Paulson to head the ailing company, will not receive a bonus. In a letter to Geithner over the weekend, the CEO said the deals for the payments were cut early last year, well before he took over AIG.

Geithner told congressional leaders in a letter Tuesday that AIG would be required "to pay the Treasury from the operations of the company the amount of the retention awards just paid." "In addition, we will deduct from the $30 billion in assistance an amount equal to the amount of those payments," he wrote. In his prepared testimony, Liddy called AIG "too complex, too unwieldy and too opaque … to be well managed."

-excerpt from NPR