Merkley Calls On AIG To Revoke Bonuses Or Face Legislation To Recover Funds Through Taxation

Press Release

Oregon's Senator Jeff Merkley today demanded American International Group (AIG) immediately renegotiate bonuses for employees or face legislation from Congress that would recoup the funds through taxation. In comments at a Senate Banking Committee hearing, he also called for robust regulation of the credit default swaps that led AIG and our financial markets to the brink of ruin.

"The individuals who are receiving these bonuses were the very same ones who trafficked in financial machinations that drove AIG into the ground. It is unfathomable to me and many Oregonians that they should be rewarded for leading their company to disaster," said Merkley. "I will do everything I can to make sure these executives are not rewarded for abetting the financial crisis at the very moment thousands of Oregonians are losing their homes, jobs and retirement savings."

It was disclosed over the weekend that AIG had authorized $165 million in "performance-based" bonuses for employees of the company even as AIG had received $170 billion in taxpayer funds to keep the company running over the past six month. Senators Merkley, Charles Schumer of New York, Harry Reid of Nevada and others wrote to Edward Liddy, Chair and CEO of AIG, to insist that the company immediately renegotiate the employee contracts to rescind the bonuses. If action is not taken, the senators pledged to enact legislation, "that would allow the government to recoup these bonus payments through the tax code."

Also today, Merkley participated in a Senate Banking, Housing and Urban Development Committee hearing on regulation of the insurance industry. Many of the problems at AIG arose because it was operating as an unregulated insurer of financial transactions by issuing exotic securities called "credit default swaps."

Merkley called for bringing oversight to the credit default swap market and treating the instruments as the insurance policies they are. This step is one critical piece of a larger effort to contain the financial crisis created by abuses in the mortgage and financial markets.

"This situation is an outrage to me and to the American people who, left with no other alternative because of the unbridled greed of executives at AIG and other financial institutions, agreed to put forward their hard earned dollars to try to keep our economy from total collapse," said Merkley. "We have a duty, an obligation to fix our insurance regulatory system. "

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