AIG Bonus Checks May Be Taxed At Up to 100%, Says Sen. Chuck Schumer
BY Helen Kennedy
DAILY NEWS STAFF WRITER
Eleven AIG execs who got $1 million-plus "retention" bonuses to keep them at the firm have already left - including one who walked away with $4.6 million.
The bombshell revelation came as Congress warned AIG execs to return their millions in bonuses - or face a possible new law taxing those payouts at up to 100%.
"They should voluntarily return them. If they don't, we plan to tax virtually all of it," New York Sen. Chuck Schumer declared on the Senate floor.
"To those of you getting these bonuses: be forewarned, you will not be getting to keep them."
New York Attorney General Andrew Cuomo, in a letter to Congress, said he had learned that 11 AIG executives who got retention bonuses of over $1 million no longer even work there.
In total, Cuomo said, the top 10 bonus recipients at AIG shared a combined $22 million, 73 got more than $1 million and the most handsomely paid got a whopping $6.4 million.
Schumer called it "Alice in Wonderland business practices" to give bonuses to executives at a firm that lost nearly $100 billion last year and had to be rescued with $170 billion in taxpayer money.
"It boggles the mind," he said.
Rep. Carolyn Maloney (D-N.Y.), head of the Joint Economic Committee, was drawing up one tax bill, and there were others being proposed.
"What is the highest excise tax we can impose that will stand up in court?" mused Senate Finance Committee Chairman Max Baucus. "Let's find out."
As the rhetoric grew ever more heated, Iowa Sen. Chuck Grassley had to apologize for saying AIG execs should "follow the Japanese example and...do one of two things: resign or go commit suicide."
AIG, which has been hunkering down under the fusillade, issued a statement saying: "The remark is very disappointing, but AIG's employees continue to work with poise and professionalism to take care of policyholders and repay taxpayers."
After President Obama declared himself outraged about the bonuses on Monday, Republicans - and some Democrats - pointed fingers at the White House, saying Obama and his team should have stopped the bonuses long ago.
"It looks like a lot of incompetence," said Sen. Richard Shelby (R-Ala.). "I think (Treasury) Secretary Geithner does not have his hands around the details of this."
Democratic Sen. Chris Dodd, chairman of the Senate banking committee, demanded a full briefing from the Federal Reserve and the Treasury on why clauses weren't attached to the four various AIG bailouts to halt bonuses.
"Why wasn't the Fed putting conditionality four different times they provided resources to AIG?" Dodd asked.
"We need to find out exactly who they are and exactly how many more may be coming along."
Dodd included a clause in the $787 billion stimulus package - different from the TARP bank bailout and the AIG handouts - that allowed payment of corporate bonuses agreed to before Feb. 11.
Meanwhile, New York Attorney General Andrew Cuomo said he has issued subpoenas for the names of AIG employees given bonuses despite the company's near-collapse. Cuomo said his office will investigate whether the bonus payments are fraudulent law because they were promised when the company knew it wouldn't have the money to cover them.
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