March 18, 2009

U.S. Rep. Paul E. Kanjorski, D-11, should push hard today to get the straight story from insurance giant American International Group.Kanjorski, who represents Monroe County, is chairing a hearing of the House Financial Services Subcommittee on Capital Markets.

For the first time, AIG Chairman and CEO Edward M. Liddy will testify directly before Congress about how the company got into the mess that required $170 billion taxpayer bailout - and explain the $165 million in bonuses that are the latest taxpayer outrage. Kanjorski strongly opposes the bonuses. He should do his utmost to hold Liddy's feet to the fire. Any company that is receiving such unprecedented federal assistance owes a full accounting of why it deserves the funds and how it will use them.

Among those testifying today will be Standard & Poor's Managing Director of Insurance Ratings Rodney Clark, the commissioner of the Pennsylvania Insurance Department, the Hon. Joel Ario; Orice M. Williams, director of the Government Accountability Office's Financial Markets and Community Investment; and others.Many of the AIG retention bonuses will go to the very AIG Financial Products unit employees who got the company involved in the credit default swaps that landed AIG in red ink. Liddy earlier agreed to cut back bonuses of other executives, and he himself will work for a $1 salary. But Kanjorski properly notes that the bailout gives the federal government an 80 percent stake in AIG. Given the widespread and dramatic economic collapse that has occurred since the bonuses were planned and pledged last year before the bailout agreement, they warrant a thorough investigation.

Kanjorski has been raising questions about AIG for months. Last fall he challenged AIG junkets. He telephoned Liddy in January to object to the bonuses. He and U.S. Rep. Joseph Crowley, D-N.Y., then wrote to the Federal Reserve and Treasury Department calling for scrutiny and reduction of the bonuses. Kanjorski and Crowley convinced AIG to stop $93.3 million in deferred compensation payouts to several thousand AIG employees and agents. Kanjorski also awaits a Government Accountability Office study he requested on the government's rescue of AIG and what effect it is having on the domestic market. The report is expected later this month.AIG got the bailout because the federal government concluded last year the company was so intertwined with the global economy that an intervention was necessary. Taxpayers deserve to hear how AIG is using the $150 billion it has received so far.

The first question Kanjorski should ask is how in the world Liddy or anyone in AIG's Financial Products unit can justify those bonuses.