February 03,2010

Press Contact:

Jill Kozeny, 202/224-1308
Jill Gerber, 202/224-6522

Grassley Seeks to Learn Whether Some AIG Bonus Contracts Were Executed After the Bailout

WASHINGTON --- Senator Chuck Grassley is asking the Treasury Secretary to disclose information about the timing of bonus contracts for executives at American International Group (AIG), in response to comments by the administration’s Special Master for Compensation that the contracts are binding because they were entered into before the federal government bailout in 2008.

Grassley said it’s his understanding that some of the retention bonus agreements were signed in September 2008, after the Federal Reserve pumped billions of dollars into AIG, and that some of the retention bonus agreements were signed in October 2008, after the passage of the Troubled Assets Relief Program, or TARP.

In a letter sent this afternoon, Grassley wrote, “At a minimum, why should Treasury honor contracts executed in September and October, 2008, after AIG began receiving billions in taxpayer support?”

Grassley also asked for an accounting of the administration’s efforts to follow through on the President’s pledge to “pursue every single legal avenue to block these bonuses and make the American taxpayers whole.” He also requested information about what has been done to determine the role that bonus recipients may have played in decisions that contributed to the losses that threatened to bring down AIG and, according to some accounts, the entire financial system.

In a statement issued last night, after an additional $100 million in bonus awards were reported, Grassley said, “AIG has taxpayers over a barrel. The Obama administration has been outmaneuvered. And the closed-door negotiations just add to the skepticism that the taxpayers will ever get the upper hand.”

The text of Grassley’s letter to Treasury Secretary Timothy Geithner follows here. A transcript of Grassley and Geithner discussing the bonuses at yesterday’s hearing is below the letter.