The attorney-general of New York Andrew Cuomo has added his comments to the melee surrounding bonuses at American International Group (AIG). The insurance major, which has so far taken $173 billion of taxpayer bailout money, has set aside a $450 million bonus pool for employees of AIG Financial Products. AIGFP is the division which, among other things, traded complex credit products. Specifically, $165 million worth of bonuses were due to be paid by March 15, following a $55 million payout already made.
The AIG bonuses have led to public outrage and President Barrack Obama has condemned the payments and gone on record saying that he will explore all legal avenues to block them.
On March 16, Cuomo sent a letter to Edward Liddy, chairman and CEO of AIG since it was brought under the control of the US government, demanding details of the individuals to whom the bonuses are intended to be paid. Liddy had earlier said that AIG is contractually obliged to pay the bonuses so Cuomo has also requested the contracts under which the payments are obligatory. Further, Cuomo has asked for details of the job description and performance of each intended recipient. Cuomo has said he is ready to subpoena the information if it is not voluntarily provided.
Liddy has said that the fate of AIGFP's $1.6 trillion derivatives portfolio and a number of complex trades on its books is linked to retaining the traders who are due to be paid the bonuses and that the compensation plan was developed to retain 400 employees critical to the AIGFP business.
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