Tricounty News

Klobuchar on AIG Bonuses: A slap in the face to American taxpayers and an insult to responsible financial institutions

Klobuchar and Senators tell AIG to give the money back or Congress will introduce legislation to recoup all of the bonuses.    Washington, D.C.-U.S. Senator Amy Klobuchar took to the Senate floor today over American International Group's (AIG) decision to give $165 million in bonuses to the same traders that brought the American economy to the brink.  Klobuchar called it an abuse of taxpayer funds and said that AIG needs to do the right thing and give the money back.      "The American public is outraged by the arrogance and abuse of taxpayer funds-and so am I," said Klobuchar.  "I believe the Administration and Congress should do everything in our power to block these payments and demand accountability.  AIG's bonus payments are not only a slap in the face to American taxpayers, they're also an insult to the many financial institutions that are responsible and well-behaved-whether large banks, small-town banks or credit unions."    Klobuchar said that if AIG refuses to take action she and other Senators will introduce legislation to impose a steep tax on AIG bonuses-possibly as high as 91 percent-that would, in effect, recover nearly all of the bonus money.     Today Klobuchar and a group of Senators wrote to the Chairman and CEO of AIG, Edward Liddy, and told him to immediately renegotiate these contracts in order to recoup these payments and make the American taxpayer whole.  The full text of the letter is below:    March 17, 2009    Edward Liddy Chairman and CEO American International Group 70 Pine Street New York, NY 10270    Dear Mr. Liddy,    We write today to express our outrage at American International Group's recently revealed multi-million dollar bonus payments. In these perilous economic times, it is unconscionable for the American taxpayer to find out that the very employees responsible for running the company into the ground have now received "performance-based" awards that are hundreds of times as large as the average American's yearly salary.  If these contracts are not renegotiated immediately, we will take action to make American taxpayers whole by recouping all of the bonuses that AIG has paid out to its financial products unit, which, by all accounts, is primarily responsible for the near-failure of the company and the devastating impact on the global financial markets.    For a company that would not exist anymore but for a $170 billion taxpayer funded rescue, it is simply morally unacceptable to spend $165 million on bonus payments, and especially offensive to spend $450 million over the next two years rewarding the employees that helped fuel the nation's financial crisis.  Given the fact that it was the employees in this unit that brought your firm to the brink of bankruptcy and caused such havoc in the world, rewarding them is not only morally reprehensible, but entirely indefensible on any business grounds.  It is the grossest perversion of the idea of a "performance bonus" imaginable. In America, we believe in rewarding success.  AIG is attempting to reward the most extreme failure.              We insist that you immediately renegotiate these contracts in order to recoup these payments and make the American taxpayer whole. We stand ready to take the difficult, but necessary step of working to enact legislation that would allow the government to recoup these bonus payments, perhaps by imposing a steep tax--as high as 91 percent--that will have the effect of recovering nearly all of the bonuses that have been paid out since AIG turned to taxpayers for help.    At a time when families across the country are struggling to make ends meet, and hundreds of thousands of Americans are losing their jobs each month, the hubris of this company, and these employees, to demand taxpayer assistance for these bonus payments is simply and plainly unacceptable. We urge you to bring your employees to the table to renegotiate these contracts immediately. We expect that you will report back to Congress on your efforts to recoup these payments in short order. Thank you for your prompt attention to this matter.    Sincerely, Senators Klobuchar, Reid, Schumer, Murray, Akaka, Boxer, Carper, Feinstein, Harkin, Klobuchar, Lincoln, Menendez, Merkley.