AIG Gifts Itself With $93 Million in Quickie Payouts!

Submitted by SadInAmerica on Sat, 01/10/2009 - 1:27pm.

Insurer claimed accelerated pay would help retain employees, but lawmakers say the bulk of money earmarked for EX-WORKERS!

American International Group deferred $93.3 million in questionable payouts to senior executives and former employees and agents following the intercession of two Democratic lawmakers.

The lawmakers, Reps. Paul Kanjorski (D-Pa.) and Joseph Crowley (D-NY), criticized the Treasury Department and Federal Reserve for approving the payments. The insurer is due to receive $150 billion under the federal bailout.

The employee payouts were to be made by April 1 after deferred compensation plans were terminated by the insurer, AIG said in a statement yesterday.

Instead, only current employees and agents will now get the money in the next few months, while the others will have to wait until after they retire or leave the company, the statement said.

AIG had said in November that accelerating the deferred work payments would help retain key employees. But the congressional inquiries yielded information showing that $90 million would go to former employees and agents, the two lawmakers' said in a statement. These payments would have no impact on keeping key personnel.

The congressmen's questions also led to the determination that $3 million was to be going to several top AIG executives who are subject to limits on compensation under the bailout legislation enacted in October, the lawmakers said.

The Treasury and Fed had reviewed AIG's plan before it was announced in November, the congressmen said.

"I am appalled by the lack of oversight by the Federal Reserve and the Treasury on this matter," said Mr. Kanjorski, who chairs a Financial Services subcommittee. "A minimal review of AIG can result in a better use of taxpayer money."

Spokespersons for the Treasury and Fed did not immediately respond to requests for comment.

AIG spokeswoman Christina Pretto confirmed that $93.3 million in accelerated payments were stopped as a result of the lawmakers' intercession.

"We believe this is a positive outcome that still allows AIG to address concerns some employees have about accessing pay that they had earned but deferred," she said.

Messrs. Kanjorski and Crowley said they plan to send a letter this week to Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke asking what kind of review and oversight has been established for AIG.

The Treasury Department has been sharply criticized by Congress's Government Accountability Office for doing a poor job of monitoring how banks are using as much as $250 billion in bailout money they have received. The nonpartisan office's December report also faulted the federal agency for its lax oversight of contractors hired under the program.

Bailout legislation providing up to $700 billion in funds was enacted in October.

See a copy of the lawmakers' statement,

Neil Roland - January 8, 2008 - source FinancialWeek

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Submitted by SadInAmerica on Sat, 01/10/2009 - 1:27pm.