AIG handed out bonus payments totaling $100 million to its employees today in the division that required the huge government bailout according to Kenneth Feinberg, the Obama administration pay czar.
Feinberg admitted the retention bonuses were established contractually much before American International Group Inc. required $180 billion in tax payer money to save them from the brink of collapse.
Feinberg referred to them as “grandfather payments,” acknowledging their legitimacy while railing against their existence. For their part, in response to the outrage felt by a public still struggling to get by, AIG employees have arranged to reimburse 39 million out of $45 million in bonuses back to the Treasury.
AIG still owes the government $120.7 billion and has made some agreements to help assuage the frustration felt toward the insurance giant. AIG employees agreed to lower retention payments by $20 million, still only a fraction of what is owed.
Feinberg, on his part believes the guaranteed bonuses will be no more in a couple of months.
Wednesday, Treasury Secretary Timothy Geithner who was President of the Fed at the time of the bailout said Congress will begin recovering the AIG bonus expenses through the President’s proposed new budget guidelines and taxes on big banks.
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