New York's Attorney General Andrew M Cuomo has asked the American International Group (AIG) whether it still had any plans of awarding bonuses or pay hikes to its management and executives, after it received around $150 billion from the government in loans to rescue the insurer from collapse.
Cuomo, in a letter to AIG CEO Edward M Liddy, has said that it ''seems hard to believe that AIG could pay significant bonuses or give raises to its executives after the company has quite literally been bailed out by the American taxpayer.'' He has warned AIG against a decision on executive bonuses, saying it ''has significant legal ramifications.''
Cuomo also reminded Liddy that Goldman Sachs, which ''received far less in federal funds than AIG'' had decided to scrap bonuses for its top executives.
Earlier this month, the US government had invested $125 billion in Goldman, Citigroup and seven other large US banks, with the recipient companies having agreed to restrictions on executive compensation. Cuomo also cited the precedent set by two other banks, UBS and Barclays, neither of whom ''have been bailed out by taxpayers like AIG,'' that were also scrapping their bonuses.
"We believe top executives should shoulder their fair share of these difficult economic times,'' Cuomo Liddy in his letter.
Cuomo had on Monday asked Citigroup to cut executive bonuses after the bank announced plans to cut 52,000 jobs. "Please inform my office as soon as possible what AIG plans to do with respect to executive bonuses and pay raises this year" Cuomo warned.