Press Release
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For Immediate Release |
Contact: (202) 225-3965 |
| CROWLEY AND KANJORSKI CALL ON TREASURY AND FED TO STEP UP OVERSIGHT OF AIG Congressmen’s Investigation Reduces AIG Spending by $93.3 Million |
| (Washington D.C.) – Congressman Paul E. Kanjorski (D-PA), the Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, and Congressman Joseph Crowley (D-NY), a Member of the House Committee on Ways and Means, delivered a letter to Treasury Secretary Henry Paulson, Jr. and Federal Reserve Chairman Ben Bernanke to address their concerns about the regulators’ oversight of American International Group (AIG). Both Members of Congress complained that the Treasury Department and Federal Reserve have failed to effectively monitor AIG, a company which has now received commitments to obtain more than $150 billion from the federal government. Last week the Congressmen applauded AIG’s decision to withhold $93.3 million of its payouts. The original plan included payouts to employees no longer employed by AIG and some of the company’s top executives who are subject to limits on compensation under the economic rescue package which was enacted on October 3. At the Congressmen’s urging, AIG agreed to revise its payout plan. The text of Congressmen Kanjorski and Crowley’s letter to Secretary Paulson and Chairman Bernanke from January 12 follows: Dear Messrs. Paulson and Bernanke: We are concerned about the level of oversight being conducted by the Department of the Treasury and the Federal Reserve Board over those companies receiving Federal investment, with our most recent red flag being the Federal approval of a plan by the American International Group (AIG) to end and accelerate payout of fourteen of its voluntary deferred compensation plans. In November 2008, AIG announced it would end fourteen separate, elective deferred compensation plans. Previously, participants in these plans had to retire or leave AIG in order receive payment under these deferred compensation plans. So as not to encourage deferred compensation plan participants to leave AIG in order to receive payment of their deferred compensation, AIG decided to accelerate payment of these deferred compensation plans and to pay out some $367 million to several thousand current and former AIG employees and agents during the first quarter of 2009. Upon AIG’s announcement, we contacted AIG directly to question these decisions. AIG cooperated fully with our inquiry and realized that more than $90 million of the accelerated deferred compensation would go to former employees and agents. AIG also identified approximately $3 million in deferred compensation that would go to several of the top seventeen AIG executives that are subject to the most extensive compensation/severance restrictions under AIG’s agreement with the Treasury Department. Agreeing that this $90 million payout could not be justified as an employee retention program and that the $3 million to top executives was inappropriate at this time, AIG volunteered to revise the accelerated payout of its deferred compensation plans. Now, the payouts no longer apply to former employees and agents, nor do they apply to any of AIG’s top seventeen executives. While we are pleased with AIG’s cooperative response to our inquiries, we are concerned with the oversight of AIG by the Treasury Department and the Federal Reserve. We are struck by how minimal review and three phone calls from staff resulted in AIG’s decision to reduce its accelerated deferred compensation plan by $93 million so those resources are available for use by creditors of AIG - the American taxpayers - should that situation arise. We ask that, by the end of January, the Treasury Department and the Federal Reserve detail to us in writing, the systems of review and oversight that have been established for AIG and your efforts and plans to keep Congress informed of this oversight. Additionally, we would like you to detail how the Treasury is enforcing the executive compensation restrictions mandated for recipients of the Federal TARP dollars. While questions remain about why the Federal Government ended up as a 79 percent shareholder in AIG, it is now time for the Treasury Department, the Federal Reserve and Congress to work together with AIG to make the best of an admittedly difficult situation. Our recent interaction with AIG gives us great hope that AIG is able and willing to live up to its responsibilities. We now ask the Treasury Department and the Federal Reserve to join us and work together to assure that the Federal Government’s unprecedented intervention in AIG is beneficial to the American taxpayer and to all the parties involved. Sincerely, Paul E. Kanjorski Member of Congress Joseph Crowley Member of Congress ### |