AIG Reveals $454 Million In 2008 Performance Bonuses

From Reuters.com:

Embattled insurer American International Group (AIG.N) paid some $454 million in previously undisclosed performance bonuses to employees for 2008, the company said in answers to questions from a U.S. lawmaker that released on Tuesday.

AIG was widely criticized for paying out some $165 million in retention bonuses after it received some $180 billion in government bailout aid. Some of the retention bonuses were returned by employees after the firestorm of criticism.

The company told Representative Elijah Cummings, a Maryland Democrat, the performance bonuses were paid out by operating units, across the company's operations in some 120 countries.

Payments ranged from an average of $5,403 to employees of its property-casualty group, to $51,026 on average for those in its asset management group.

The payments are in addition to an about $120 million corporate bonus pool designated for holding company employees and executives at subsidiary companies.

The performance bonus plans for the various AIG units were set before the company teetered on the brink of bankruptcy, forcing them to take government aid last September.

The payments are separate from $1 billion in retention payments to entice employees to stay with the company.

The company also told Cummings AIG's bonus plans for 2009 were under development, "in consultation with the Federal Reserve and Treasury."

Law Professor Who Advised Obama Says House AIG Bill May Be Unconstitutional

From ThePlumline.WhoRunsGov.com:

Laurence Tribe, who advised Obama during the campaign, [says] he’s leaning towards seeing the new House bill to tax back all the AIG bonuses as unconstitutional.

Tribe’s assertion could spell big trouble for the measure, because it could harden opposition within the Obama administration against the proposal at a time when Obama and his advisers are already expressing doubts about it.

Tribe had previously said that he thought the measure — which would slap a 90% tax on bonuses for executives whose family incomes exceed $250,000 — would pass constitutional muster. But now, after taking a closer look, he’s not so sure.

Tribe says the problem with the bill is that the Constitution forbids Congress from enacting a “bill of attainder,” which would essentially “legislate punishment of an identifiable class,” as he put it. Tribe noted that the Supreme Court had used that clause to slap down other laws.

Tribe says the main problem is that it’s hard to make the case that the law isn’t “punitive.”

“Its punitive intent is increasingly transparent,” Tribe says. “when you have Chuck Grassley calling on [executives] to commit suicide, and people responding to pitch fork sentiment, it’s hard to argue that this isn’t an attempt to punish an identifiable set of individuals who are the subject of understandable outrage.”

The whole point of opposing bills of attainder, Tribe says, is to prevent what some have called “trial by legislature.” Tribe concludes: “That’s the primary vulnerability.”

This could be a problem for House Dems. More on this soon.

Dingell Unveils Plan to Tax AIG Bonuses

From Detnews.com:

Rep. John Dingell on Tuesday joined a growing list of lawmakers proposing legislation to recover the controversial bonuses paid to employees of insurance giant AIG.

Dingell, D-Dearborn, introduced a bill that he said would tax at a 95 percent rate any bonuses paid to any employees of companies receiving federal money from the Wall Street bailout fund.

"It is unconscionable that companies dependent upon the largesse of the federal government for their very existence should in turn pay the very employees partially responsible for our current calamity such irresponsibly exorbitant bonuses," Dingell said in a written statement.

On Monday, Rep. Gary Peters, D-Bloomfield Township, introduced his own bill, which would add a 60 percent surtax to the bonuses. Peters' staff said the surtax, plus federal income taxes and state and local taxes, would account for nearly 100 percent of the bonuses.

There was support from lawmakers of both parties and both houses of Congress on Tuesday for trying to recover the controversial bonuses by legislation. American International Group has received $170 billion in federal aid, designed to keep the company from collapse, which economists fear could drag down much of the global financial system.

73 AIG Bonuses Hit Million-Dollar Mark

Just months after getting bailed out by American taxpayers, AIG has once again made headlines by giving out millions of dollars in bonuses to their executives, many of which are no longer working for the company. CBSnews.com has posted an interesting article on the outrage sparked by these huge bonuses, and what President Obama and Congress are planning to do about it. Check out a portion of the article below.

Troubled insurance giant American International Group paid bonuses of $1 million or more to 73 employees, including 11 who no longer work for the company, New York Attorney General Andrew Cuomo said Tuesday.

Cuomo subpoenaed information from AIG on Monday to determine whether the payments made over the past weekend constitute fraud under state law. He says contracts written in March 2008 guaranteed employees 100 percent of their 2007 pay for 2008, regardless of their performance.

President Barack Obama and Washington lawmakers have blasted AIG for paying more than $160 million in bonuses to employees of its Financial Products division, the unit primarily responsible for the meltdown that led to a federal bailout of the company, while the company has received billions in taxpayer bailout funds.

Cuomo said AIG mailed the bonus checks Friday.

The company and some federal regulators have said it was obligated by contract to make the payments. Cuomo said the bonuses might have been fraudulent if AIG officials knew the company couldn't afford them.

"You could argue if the taxpayers didn't bail out AIG, those contracts wouldn't be worth the paper it's printed on," he said Monday.

There was no immediate AIG comment following Cuomo's disclosure Tuesday of the bonus amounts. Cuomo did not release the names of the recipients.

AIG spokeswoman Christina Pretto had said Monday the company was in contact with Cuomo's office and would respond to his requests for information and the subpoena.