Ellison: "AIG Excesses Demonstrate Failure of Regulatory System"

Press Release

Ellison: "AIG Excesses Demonstrate Failure of Regulatory System"

Congressman Keith Ellison (D-Minneapolis) joined his colleagues on the Financial Services Committee in expressing outrage at the payment of close to $165 million in bonuses to employees of AIG's Financial Products Group.

"It is unacceptable that taxpayer funds are being used to provide bonuses to some of the very employees who were responsible for bringing down the company," Ellison stated. "AIG and these employees must be held accountable," the 5th District Congressman said.

AIG's CEO, Edward Liddy, indicated in testimony before the Capital Markets Subcommittee of the Financial Services Committee that he has asked the bonus recipients to return half of the money. "That is simply not enough. Bonuses of any amount are unacceptable for failed stewardship," Ellison said.

The American public also learned recently the names of the counterparties who received $120 billion in taxpayer funds largely steered to them by AIG. These payments represented approximately two-thirds of the overall taxpayer assistance received by AIG. AIG underwrote about $80 billion of risky contracts (called credit default swaps) between 2003 and 2005 that ultimately led to the company's collapse last year. "They functioned as insurance, but were not regulated as insurance. On the contrary, they were not regulated at all," Ellison stated.

"The failure of AIG represents a failure of our financial regulatory system and a serious indictment of the laissez faire approach of the past eight years that said financial markets and companies can regulate themselves. They cannot," Ellison concluded.

As a Member of the House Financial Services Committee, Congressman Ellison will continue to advocate for accountability, transparency, limits on compensation, and regulatory reform.

The Financial Services Committee will hold a Full Committee hearing next week that will include the views of the Treasury Department and the Federal Reserve. Equally important, the Committee will begin reforming the entire financial regulatory system to ensure that history does not repeat itself with another AIG.

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