WASHINGTON – "Outrageous." That's what the president's chief economic adviser calls the tens of millions of dollars in new bonuses paid out by the troubled insurance giant American International Group.
Larry Summers says these kinds of bonus payments should be a matter of future regulations.
AIG has gotten more than $170 billion in a public bailout. Just this month, the company reported a loss of $61.7 billion for the fourth quarter of last year — the largest corporate loss in history.
AIG's chairman says the company entered into the bonus agreements in early 2008 before getting into severe financial trouble. Summers says the government determined it could not break those contracts after the fact.
The director of the National Economic Council spoke on ABC's "This Week.'
Insurance giant American International Group, which has
received $170 billion in funds from the government to stay afloat, will award about
$165 million in employee bonuses. The U.S. government has an
80 percent ownership stake in the company. Treasury Secretary Tim Geithner had urged AIG’s chief Edward Liddy to renegotiate the payments, but Liddy said he had “grave concerns” about the impact on the firm’s ability to retain talented staff. Liddy’s recommendation has “
outraged” the Obama administration:
The senior government official, who was not authorized to speak on the record, said the administration was outraged. “It is unacceptable for Wall Street firms receiving government assistance to hand out million-dollar bonuses, while hard-working Americans bear the burden of this economic crisis,” the official said.
The payments “are in
addition to $121 million in previously scheduled bonuses for the company’s senior executives and 6,400 employees across the sprawling corporation.”
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