AIG bonus payments controversy

The AIG bonus payments controversy began in March 2009, when it was publicly disclosed that the American International Group (AIG) insurance corporation was going to pay approximately $218 million in bonus payments to employees of its financial services division.

AIG is notable for having received taxpayer bailouts and in the fourth quarter of 2008 posted a loss of $61.7 billion, the greatest ever for any corporation. Beyond the $165 million in bonus payments that were announced, total bonuses for the financial unit could reach $450 million and bonuses for the entire company could reach $1.2 billion.

President Barack Obama said, "[I]t’s hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. How do they justify this outrage to the taxpayers who are keeping the company afloat?" and "In the last six months, AIG has received substantial sums from the U.S. Treasury. I’ve asked Secretary Geithner to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole."

Politicians on both sides of Congress reacted with outrage to the planned bonus payments. Senator Chuck Grassley (Republican, Iowa) said "I would suggest the first thing that would make me feel a little bit better toward them if they'd follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide." Senator Chuck Schumer (Democrat, New York) accused AIG of "Alice in Wonderland business practices" and said "It boggles the mind." He has threatened to tax the bonuses at up to 100%. Senator Richard Shelby (Republican, Alabama) said "These people brought this on themselves. Now you're rewarding failure. A lot of these people should be fired, not awarded bonuses. This is horrible. It's outrageous." Senator Mitch McConnell (Republican, Kentucky) echoed his comments, saying "This is an outrage." Senator Jon Tester (Democrat, Montana) said "This is ridiculous." and AIG executives "need to understand that the only reason they even have a job is because of the taxpayers." Senator Dick Durbin (Democrat, Illinois) said "I've had it." and "The fact that they continue to do it while we pour in billions of dollars is undefensible." Representative Paul Hodes (Democrat, New Hampshire) said "I think AIG now stands for arrogance, incompetence and greed."

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Wikipedia