NU Online News Service, Feb. 4, 1:53 p.m. EST
WASHINGTON–The American International Group bonus payments' controversy is continuing with Sen. Charles Grassley, R-Iowa, expanding his demands for information from the Treasury Department.
In a letter to the Treasury Department yesterday, Sen. Grassley said he is seeking more material because he believes that some of the bonuses paid to executives at the AIG Financial Products unit that brought the company to the brink of bankruptcy may not have to be paid.
Sen. Grassley said he believed payment may be unwarranted because the bonuses were authorized after the government took control of the company and began providing funds to AIG in September 2008.
"At a minimum, why should Treasury honor contracts executed in September and October 2008, after AIG began receiving billions in taxpayer support?" Sen. Grassley said in his letter.
He also wrote Treasury that it is "my understanding" that some of the retention bonus agreements were signed in September 2008, "after the Federal Reserve pumped billions of dollars into AIG, and that some of the retention bonus agreements were signed in October 2008, after the passage of the Troubled Assets Relief Program, or TARP."
The TARP salary czar Kenneth Feinberg has set limits on what companies assisted with federal TARP funds can provide in the way of top management bonuses.
The senator also wants an accounting of the administration's efforts to follow through on the president's pledge to "pursue every single legal avenue to block these bonuses and make the American taxpayers whole."
He requested information about what has been done to determine the role that bonus recipients may have played in decisions that contributed to the losses that threatened to bring down AIG and, according to some accounts, the entire financial system.
It marked the second day in a row that Sen. Grassley has criticized the Treasury Department for allowing AIG to distribute an additional $100 million in bonuses this week.
More bonus money is expected to be paid in early March.
In comments to Treasury Secretary Timothy Geithner Tuesday at a hearing on the administration's budget, Sen. Grassley argued, "AIG has taxpayers over a barrel. The Obama administration has been outmaneuvered."
The senator said the Treasury Department has not done enough to provide him with data on the bonus issue that he requested more than a month ago.
Sen Grassley was briefed last week by Mr. Feinberg on the issue, he said, but he still has not received the documents he asked for last December.
His latest letter said that he wants to see documents about the timing of the bonus contracts for executives at American International Group in response to comments by Mr. Feinberg, the administration's special master for compensation, that the contracts are binding because they were entered into before the federal government bailout in 2008.
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