“We’ve heard the people,” CEO Edward Liddy told a congressional panel Wednesday, March 18.
Still, Liddy stood by his stance that AIG had no choice but to pay $165 million in what it called retention bonuses to hundreds of employees at the derivatives division that caused the company’s collapse in September.
He said the division’s portfolio of toxic assets remains huge—at $1.6 trillion—and it could “explode” unless AIG keeps experienced staff to wind it down.
Otherwise, he warned, the insurer, now 80 percent owned by the federal government, will be unable to ever repay the nearly $180 billion it has borrowed from taxpayers.
“I know $165 million is a lot of money,” Liddy said. “But in the context of the $1.6 trillion book [of toxic assets] and the money already invested in us, we thought it was a good trade.”
He added that he balanced the risks associated with denying the bonuses and alienating staffers with “blindly following legal advice.”
Members of Congress seemed pleased that some AIG staffers are being asked to give back bonus money, but questioned why they ever got it in the first place.
Rep. Barney Frank, D-Massachusetts, said AIG should have denied the payouts and forced the employees into the difficult position of suing for them. (His office has released the full language of the company’s retention-bonus contract.)
Frank also said he would seek a subpoena for the employees’ names unless Liddy provided them, something Liddy said he wouldn’t do, citing his concerns for the employees’ safety as public anger rises over details of the AIG bailout. New York Attorney General Andrew Cuomo has issued a subpoena for the same information.