WASHINGTON –American International Group CEO Edward Liddy, during his scalping Wednesday before House members furious over $165 million in bonuses going to the bailed-out insurer, finally got the message that a company living on the charity of taxpayers has some extraordinary responsibilities.
Until his testimony, Liddy, whatever his intentions, acted as if AIG, on the dole with $170 billion in bailout money, could behave as it did when the company was solvent.
Rep. Judy Biggert (R-Ill.), a member of the House panel questioning Liddy, drilled down to the question of moral corporate citizenship that has eluded Libby when she asked him, “If the taxpayers hadn’t loaned AIG any money, would the executives who received the bonuses have received them?”
Replied Liddy: “Probably not. . . . I think the company would have spiraled into bankruptcy. . . . the basic contracts would have been voided.”
Liddy, who insisted Tuesday that nothing could be done about the bonuses paid to about 400 hedge fund honchos because they had contracts that legally could not be altered, came to the hearing with a symbolic concession, a request that the bonuses be voluntarily returned or reduced.
“We’ve heard the American people loudly and clearly these past few days,” Liddy said. “The payment of large bonuses to people in the very unit that caused so much of AIG’s financial troubles does not sit well with the American taxpayer in any way, shape, or form, and for a good reason.
“Accordingly, this morning I’ve asked the employees of AIG Financial Products to step up and do the right thing. Specifically, I’ve asked those who received retention payments in excess of $100,000 or more to return at least half of those payments.”
Liddy — whose actual testimony was far more conciliatory than his prepared statement — asked the very top executives to reject 100 percent of the bonus checks. He said some refunds have started coming in already.
With Liddy insisting these past days that AIG contracts were sacred, Rep. Don Manzullo (R-Ill.) took a shot at Liddy, the former CEO of Northbrook-based Allstate, reminding him he decreed contract changes with employees while he was at Allstate.
“I did do that,” Liddy conceded.
Treasury Secretary Timothy Geithner, President Obama, Congress and mad-as-hell taxpayers are looking to get the money back — all of it.
The AIG crisis is consuming the White House, a sizable distraction at a time when Obama is trying to sell his massive 2010 spending plan. He also is assuring the nation his $787 billion stimulus spending won’t be lost to waste, fraud and abuse.
Before leaving for California Wednesday, Obama said he wanted to create a “resolution authority” that would exercise greater authority over AIG, an element in a larger package of regulatory reforms he is planning.
People are right to be angry over the AIG mess, he said. “What I want us to do, though, is channel our anger in a constructive way.”
Congress and the Bush White House — not the Obama administration — approved the deal that let AIG workers retain their bonuses even as AIG was going on welfare.
Today, the House will vote on a bill to tax the bonuses at a 90 percent rate.
AIG Financial Products workers are due another $200 million in bonuses in March 2010, already in the pipeline for work not yet done. Said Liddy: “That size bonus, there’s no way that that will be paid.”