WASHINGTON–American International Group announced yesterday it is halting its multimillion-dollar lobbying activities while it works to restore profitability and pay off the $85 billion government loan that is now its financial lifeline.

AIG said it has decided to “suspend all lobbying activities in conjunction with a review of all AIG expenditures and activities.”

According to the Center of Responsive Politics, in the 30 months from Jan. 1, 2006 to June 30, 2008 AIG spent $26 million for outside lobbyists. CRP said this year, AIG has spent $6.6 million on in-house lobbying activity, while outside lobbyists have been paid $768,000.

This compares with spending on outside lobbyists by the politically powerful, federally backed mortgage operations of Freddie Mac and Fannie Mae. During the same 30 month period Freddie Mac spent $21.8 million and Fannie Mae $18.7 million on lobbying.

The AIG cutback in lobbying could be a blow to the coffers of the American Council of Life Insurers. According to an industry lobbyist familiar with the issue, AIG pays the maximum annual $1.5 million ACLI levies on its members for political activity.

AIG spokesman Joseph Norton said AIG was ending its lobbying activities as criticism from members of Congress and New York State Attorney General Andrew Cuomo mounted over the company's spending at a time when it is staying afloat with a taxpayers' bailout.

Mr. Norton said AIG employees in Washington and elsewhere who engage in lobbying will remain on the payroll pending the company's review.

On Friday, Rep. Henry Waxman, D-Calif., chairman of the House Oversight and Government Reform Committee, asked AIG to provide information on the pay of all its executives over the last few years and to disclose how much it has spent on junkets for agents and brokers since it applied for government help in mid-September.

The letter from Rep. Waxman also demanded that AIG provide information on the oversight of AIG Financial Products, a unit based in London and Wilton, Conn., whose guarantee of subprime mortgages through credit default swaps has already cost the company $25 billion in cash.

Also on Friday, Sen. Dianne Feinstein, D-Calif., and Sen. Mel Martinez, R-Fla., wrote a letter to AIG Chief Executive Edward Liddy that asked him not to use its government loan to try and roll back tougher mortgage-industry licensing requirements and other controls.

The provisions were contained in an amendment to a housing bill passed by Congress in July that was sponsored by the two senators.

“AIG has spent millions to lobby states to soften the licensing provisions, even after taxpayers loaned AIG more than $120 billion to prevent its collapse precipitated by excessive risk-taking,” the senators wrote in their Friday letter to Mr. Liddy. “We find it unconscionable.”

The lobbying review at AIG is being undertaken “in order to ensure that everything the company does goes to restore its profitability and return every cent of taxpayer help to the American people,” Mr. Norton said.

AIG has agreed with Attorney General Cuomo to cancel about 160 events scheduled for coming months–events expected to cost a total of $80 million, an AIG spokesman said yesterday.

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AIG Halts Washington Lobbying Activity

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