The $165 million bonus debacle at AIG (which one Congressman said now stands for “Arrogance, Incompetence and Greed”), appears to be on a solution path, as AIG’s CEO, Edward M. Liddy, told a congressional committee this morning that he asked some recipients to give back half.
Mr. Liddy, who was required to take an oath before testifying, said that the “cold realities of competition” for customers and employees played a role in the firm’s decision to make the payments, which have spurred a public backlash given the roughly $170 billion the government has used to prop up the troubled insurer.
“Because of this, and because of certain legal obligations, AIG has recently made a set of compensation payments, some of which I find distasteful,” Mr. Liddy said.
“I have asked the employees of AIG Financial Products to step up and do the right thing,” Mr. Liddy told lawmakers. “Specifically, I have asked those who received retention payments of $100,000 or more to return at least half of those payments.”
The A.I.G. chief said that some recipients had already offered to give up all of their bonuses.
Describing the financial products division, Mr. Liddy called it an “internal hedge fund” that exposed the company to extreme market risk. The result, he said, was that “mistakes were made at AIG on a scale few could have ever imagined possible.”
“We are meeting today at a high point of public anger,” said Mr. Liddy, a former chief executive of Allstate who was installed as A.I.G.’s chief when the Federal Reserve announced its rescue package.
“I share that anger. As a businessman of some 37 years, I have seen the good side of capitalism. Over the last few months, in reviewing how A.I.G. had been run in prior years, I have also seen evidence of its bad side.”
From The New York Times and Wall Street Journal.
