Apr 28 2009

AIG Bonuses Expose Long-Standing Systemic Problem of Corporate Excess

Feature Stories | Published 28 Apr 2009, 9:07 am | Comments Off on AIG Bonuses Expose Long-Standing Systemic Problem of Corporate Excess -

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AIG

Edward Liddy, the embattled CEO of AIG is testifying at a House Financial Services subcommittee hearing this morning. Members of Congress and the Obama Administration are falling over themselves this week to denounce the $165 million in bonuses for top executives at AIG. The corporation in question received $170 billion in bailout funds last year — the government now owns an 80% stake in the company as a result. Company executives have defended the bonuses saying that they were contractually obligated to pay them out, and that such incentives are required to retain top talent. Now a few members of Congress like Senator Chris Dodd, have proposed a narrow tax designed to recoup the majority of those bonuses if they are not paid back to the government voluntarily. Meanwhile, some institutions that benefited from the most recent bailout, such as Citigroup and Morgan Stanley, are apparently looking for ways to get around the caps on bonuses that were a condition of the money, by trying to raise base salaries for top executives. Some smaller banks have offered to pay the government back rather than put up with the restrictions on executive pay.

GUESTS: Sarah Anderson, director of the Global Economy Project at the Institute for Policy Studies and is co-author of the book “Field Guide to the Global Economy,” Stephen Lerner, Special Assistant to SEIU President Andy Stern

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