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Top AIG bosses 'to repay bonuses' Top AIG bosses 'to repay bonuses'
(about 15 hours later)
Nine of the 10 executives who received top bonuses from US insurance giant AIG have agreed to return them, New York's attorney general says. Nine of the top 10 recipients of bonuses from US insurance giant AIG have agreed to return them, New York's attorney general says.
Andrew Cuomo said he hoped to recoup $80m (£55m) of bonus payments - which amounts to about half of the $165 million paid by AIG on 15 March. Andrew Cuomo said he hoped to recoup $80m (£55m) of bonus payments - which amounts to about half of the $165 million paid by AIG on 15 March.
The US rescued AIG with bail-out funds totalling $170bn since September 2008. The US has spent a total of $170bn on rescuing AIG since September 2008.
Treasury Secretary Timothy Geithner is due to testify on Tuesday on the need to reform the US financial system.Treasury Secretary Timothy Geithner is due to testify on Tuesday on the need to reform the US financial system.
He said on Monday that the banking crisis showed the country's financial regulatory system had failed and needed to be replaced by a stronger system with a better regulations. He said on Monday that the banking crisis showed the country's financial regulatory system had failed and needed to be replaced by a stronger system with better regulations.
"Our system basically failed its most fundamental test," he said in remarks before he was due to appear before the House of Representatives Financial Services Committee on Tuesday. "It was too fragile.""Our system basically failed its most fundamental test," he said in remarks before he was due to appear before the House of Representatives Financial Services Committee on Tuesday. "It was too fragile."
Ben Bernanke, chairman of Federal Reserve, will also testify before the committee.
While attention will focus on the outrage over the AIG bonuses, Mr Bernanke and Mr Geithner are expected to highlight the need for tougher regulation to tackle companies that pose a systemic risk.
Bonus tax?Bonus tax?
AIG's decision to pay bonuses despite being bailed out by the government had sparked widespread outrage in the US.AIG's decision to pay bonuses despite being bailed out by the government had sparked widespread outrage in the US.
AIG:TIMELINE 16 Sept: AIG avoids bankruptcy with $85bn bail-out10 Oct: Criticised for spending $223,000 on executive spa weekend day after bail-out6 Nov: The amount of money made available to AIG reaches $123bn10 Nov: AIG reports record quarterly loss of $24.5bn25 Nov: AIG chairman says he will receive $1 salary in 2008/9 and seven senior executives will not receive bonuses2 March: AIG announces biggest quarterly loss in corporate history of $61.7bn and receives a third bail-out of $30bn14 March: Documents show AIG promised to pay $220m in retention bonuses. $55m was paid in December and $165m by March 1517 March: President Barack Obama says he is outraged by the bonuses18 March: AIG chairman calls on staff to repay at least half their bonuses19 March: US lawmakers vote in favour of a bill to levy a 90% tax on big bonuses from firms bailed out by taxpayers23 March: Nine of the 10 top executives who received bonuses agree to return them Source: Reuters
Ranked the 18th biggest company in the world by Forbes at the start of 2008, it suffered massive losses related to the problems afflicting the housing and credit markets.Ranked the 18th biggest company in the world by Forbes at the start of 2008, it suffered massive losses related to the problems afflicting the housing and credit markets.
AIG played a key role in insuring risk for financial institutions around the world.AIG played a key role in insuring risk for financial institutions around the world.
The troubled insurer reported a loss of $61.7bn for the last three months of 2008, the biggest quarterly loss in corporate history.The troubled insurer reported a loss of $61.7bn for the last three months of 2008, the biggest quarterly loss in corporate history.
The bonus debacle had prompted the approval of a bill by the US House of Representatives to impose a 90% tax on bonuses awarded by companies bailed out by the US government. AIG: QUICK FACTS 30 million US policy holdersOperates in 130 countriesProvides insurance to 100,000 companies and other entities class="" href="/1/hi/business/7945774.stm">Obama 'outraged' at AIG bonuses class="" href="/1/hi/world/americas/7947735.stm">US media homes in on AIG The bonus debacle had prompted the approval of a bill by the US House of Representatives to impose a 90% tax on bonuses awarded by companies bailed out by the US government.
But President Barack Obama said such a measure would be unconstitutional.But President Barack Obama said such a measure would be unconstitutional.
The announcement that much of that money is now being returned seems likely to ensure that the bill never reaches his desk, says the BBC's Richard Lister in Washington.The announcement that much of that money is now being returned seems likely to ensure that the bill never reaches his desk, says the BBC's Richard Lister in Washington.
Mr Cuomo said 15 of AIG's top 20 bonus recipients had agreed to return their payments, which he estimated to total around $30m. Mr Cuomo said that out of the top 20 bonus recipients, 15 had agreed to return their payments, which he estimated to total around $30m.
"A number of them have risen to the occasion and I applaud them," Mr Cuomo - who is investigating AIG as well as several other financial institutions - said of the executives who had offered to give up their bonuses."A number of them have risen to the occasion and I applaud them," Mr Cuomo - who is investigating AIG as well as several other financial institutions - said of the executives who had offered to give up their bonuses.
He added that he expected to recoup all of the bonuses paid to American citizens working for AIG, which accounts for around half the $165m the company paid out. He added that he expected to recoup all of the bonuses paid to US citizens working for AIG, which accounts for around half the $165m the company paid out, though so far it had only secured about $50m.
Mr Cuomo said he did not plan to release the names of the employees who have agreed to return the bonuses, suggesting there was no implied threat that if an employee refused to return their bonus, their name would be disclosed.Mr Cuomo said he did not plan to release the names of the employees who have agreed to return the bonuses, suggesting there was no implied threat that if an employee refused to return their bonus, their name would be disclosed.
Bonuses ranging from $1,000 to more than $6m were paid to some 400 staff in the division handling the mortgage-backed assets at the heart of the financial crisis.Bonuses ranging from $1,000 to more than $6m were paid to some 400 staff in the division handling the mortgage-backed assets at the heart of the financial crisis.
Seven senior employees were paid more than $3 million, while 73 members of staff received bonuses of more than $1m.Seven senior employees were paid more than $3 million, while 73 members of staff received bonuses of more than $1m.