How AIG defends its bonuses

CEO Edward Liddy makes his case before an angry Congress

AIG CEO Edward Liddy did his best to “blunt the outpouring of criticism” over $165 million in retention bonuses, said Joseph Weber in BusinessWeek online. He told an angry House committee that the “distasteful” bonuses were legally binding and necessary to keep on employees who can unwind the company's $1.6 trillion in dangerous securities. Some executives have agreed to return the bonuses, he said, and some are receiving threats of death by piano wire.

The bonuses are clearly “ridiculous,” said David Gaffen in The Wall Street Journal online, and the “retention” aspect is questionable—11 of the employees who got $1 million or more in bonuses have already left AIG. But Liddy is probably right that there are very few outsiders able or willing to wind down AIG’s massive portfolio.

So we’re paying the “sharpies in London and Connecticut” to stay, said Steven Pearlstein in The Washington Post, in order that they don't use their insider knowledge to bet against AIG? Liddy isn’t the only one on Wall Street who doesn’t get that “it’s no longer business as usual,” but his fecklessness has put the “entire financial rescue effort in political jeopardy.”

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE
https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

“Edward Liddy is no G. Gordon Liddy,” said Daniel Gross in Slate, and blaming him for the AIG bonuses is like blaming Gerald Ford for Watergate. If Congress wants answers, it should refocus its “misplaced anger” and haul in former CEOs Hank Greenberg and Martin Sullivan, or the banks and hedge funds that taxpayers indirectly bailed out through AIG.

To continue reading this article...
Continue reading this article and get limited website access each month.
Get unlimited website access, exclusive newsletters plus much more.
Cancel or pause at any time.
Already a subscriber to The Week?
Not sure which email you used for your subscription? Contact us