Andrew Cuomo has written a letter to AIG in which he explains that they will turn over the names of those employees from the Financial Products subsidiary (that’s the division that brought down the company) who are receiving bonuses by 4:00 pm today or they are coming at them with subpoenas. Yes, ladies and gentlemen, it’s another awesome Andrew Cuomo letter after the jump.
March 16, 2009
Edward M. Liddy, Chairman & CEO American International Group, Inc.
70 Pine Street New York, NY, 10270Re: AIG Compensation Investigation
Dear Mr. Liddy:
The Office of the New York Attorney General has been investigating compensation arrangements at AIG since last Fall. We were disturbed to learn over the weekend of AIG’s plans to pay millions of dollars to members of the Financial Products subsidiary through its Financial Products Retention Plan. Financial Products was, of course, the division of AIG that led to its meltdown and the huge infusion of taxpayer funds to save the firm. Previously, AIG had agreed at our request to make no payments out of its $600 million Financial Products deferred compensation pool.
We have requested the list of individuals who are to receive payments under this retention plan, as well as their positions at the firm, and it is surprising that you have yet to provide this information. Covering up the details of these payments breeds further cynicism and distrust in our already shaken financial system.
In addition, we also now request a description of each individual’s job description and performance at AIG Financial Products. Please also provide whatever contracts you now claim obligate you to make these payments. Moreover, you should immediately provide us with a list of who negotiated these contracts and who developed this retention plan so we can begin to investigate the circumstances surrounding these questionable bonus arrangements. Finally, we demand an immediate status report as to whether the payments under the retention plan have been made.
We need this information immediately in order to investigate and determine:(l) whether any of the individuals receiving such payments were involved in the conduct that led to AIG’s demise and subsequent bailout;
(2) whether, as you claim, such individuals are truly required to unwind AIG Financial Product’s positions;
(3) whether such contracts may be unenforceable for fraud or other reasons; and
(4) whether any of the retention payments may be considered fraudulent conveyances under New York law.Taxpayers of this country are now supporting AIG, and they deserve at the very least to know how their money is being spent. And we owe it to the taxpayers to take every possible action to stop unwarranted bonus payments to those who caused the AIG meltdown in the first place.
If you do not provide this information by 4:00 p.m. today, we will issue subpoenas and seek, if necessary, to enforce compliance in court.
Andrew M. Cuomo
Attorney General of the State of New York
cc: AIG Board of Directors
Re: AIG Compensation Investigation (PDF) [Office of the Attorney General of New York]
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UHOH! Are we finally getting tired of these greedy s.o.b’s? Are we finally ready to do something about it? Accountability. Responsibility. For and from everyone no matter what their station in life. If I have to answer for my mistakes then so do they. Bigger mistakes mean a longer fall. I think while they’re in court getting drilled we should stand outside chanting “DRILL BABY DRILL!” :p
I’ll bring the torches. Who’s bringing the hounds on this mad chase?
To those who want us to sympathize with the AIG employees who were expecting/promised bonuses and now might not get them: They should be grateful they still have jobs. I’m serious. Many, many Americans have lost jobs this past year through no fault of their own, despite glowing performance reviews — simply because of this suckass economy. Those of us who still have jobs are doing without raises (never mind bonuses) for the foreseeable future, and/or accepting decreased hours or unpaid days off so that our employers can continue to meet their bottom lines and keep us on payroll.
Suck it up, AIG peeps! And yes, I’m talking to all levels of AIG staff, not just the hogs at the top. You can kiss all of our rings for helping you continue to receive a paycheck of any size.
“list of who negotiated these contracts and who developed this retention plan”
Just exactly who was the Pointy Haired Boss who let these contracts be approved? (with recs to Scott and his Dilbert cartoon strip.)
publicity stunt ++ under what legal grounds does AIG have to comply with this? Zero.
Funny, if Bush had demanded something like this, you leftist harpies would be crying “CIVIL RIGHTS VOILATIONS!”
oh and by the way, most of those bonuses are going overseas and have already been paid out. good luck getting that money back.
You can’t just “get” subpoena because you want to.
To get subpoena, which is a court order, you need an active case or investigation. For investigation, you need a statue of law being broken.
In this case, AIG technically did not break any law other than (possibly) the contract they signed with US government when they got the bailout money. Even in this case it’s federal jurisdiction and has nothing to do with NYS AG.
Threatening AIG with subpoena gives the etter a nice touch. But I don’t think AG will get it any time soon.
This is entirely the Federal Governments fault.
They gave the money to AIG unconditionally, and now they don’t like where it was spent.
Tough Luck, they should have specified conditions BEFORE they gave the money.
If AIG wanted to spend 2 Billion dollars on Hello Kitty backpacks for all of its employees, they could.
Congress did not do its job when handing out the money.
Thank god. I don’t even care if this guy is trying to push a political agenda, at least he’s actually TRYING to do something about these companies. Send them to hell in a hand basket as far as I’m concerned.
According to CNBC, “..many of the employees who received bonuses are not American and may not care that American taxpayers are outraged over the incident…” i.e., they’re based outside the USA. Gee – I’ll bet they don’t even pay American income taxes on these AIG bonuses.
Go Andrew Cuomo!
“The fact AIG took tax payer funds is irrelevant in my opinion. It shouldn’t have been offered.”
Wake me up when they go after colleges who give bonuses to presidents, deans and the like after raising tuitions to 30-40k a year.
Nice posturing.
I want to see the list of names cross referenced with addresses, telephone numbers and email addresses.
Lets make life rough for those stupid enough to accept the bonus.
I know I am going to get sooooooo badly flamed for this: I think these CEOs DO deserve the bonuses.
If there were no bonuses, who in their right minds would want to either take the job of CEO or stay in their CEO role, especially at this point in time. Executive bonuses are there to provide additional compensation so highly-qualified executives have enough incentive to stay on-board with the company. Without it, you’d have a ship with no one at the helm.
Things like parties and corporate jets (which have been perceived as extravagance) are, in fact, a necessity for executives.
For example, the party that Wells Fargo canceled in Vegas was to compensate the highest producing mortgage brokers in the company. Without these VIP mortgage brokers, you’d have a bankrupt Wells Fargo. No revenue. No profits. You have to motivate your employees somehow. In addition, the money used towards the cost of the party was already locked in and deposited more than one year prior.
Ditto with corporate jets. An executive’s time is valuable. With a corporate jet, Ford’s CEO can jet to multiple factories for a visit, all in one day. Good luck trying to get to even one factory using a commercial airline. It’s really a question of how valuable is the CEO’s time, and in most companies, the answer is that cost is not an issue as long as the company can make the CEO more productive.
There are two sides to every story. Unfortunately, we’ve been condition to hate these CEOs. But ask yourself this, is your hatred towards the CEOs truly founded on a solid bed of evidence and researched facts. Or is your hatred based on your friends & family’s (and even the media’s) hearsay about what these executives might be doing wrong?
Ok, you can now flame away.
@doireallyneedausername:
I don’t have a problem with bonuses either. It’s just that, keep in mind, a BONUS, is just that – a reward for a job well done. These executives have done an absolutely PISS POOR job. They completely fucked over millions of people, and have run the company so far into the ground that it would not stay afloat were it not for government help.
So my question to you is this: when do employees not deserve a “bonus?” Do they have to completely bankrupt the company? Does the company just have to lose billions of dollars a quarter? Or is it when the feds have to give them billions of dollars just to keep them afloat?
Nothing I know about this company is based in hearsay – it’s all FACT. The FACT is that these executives have NO FUCKING CLUE how to run a successful business. Got that? Otherwise, you see, oh geez, how do I word this so that everyone will understand? God, this is so complicated! Oh, I know. Otherwise, the business would not have gone completely bankrupt! (and yes, that’s what happened – they’re only in business now because the fed bailed them out)
You see, when you have truly “top talent” running a place, they don’t ruin it.
Imagine that.
@doireallyneedausername: There’s a flip side to that coin. Maybe if the bonuses didn’t incentivize massive short term profit at the expense of long term viability we would have people running the show who actually have the best interests of the company at heart so that they can continue to collect a paycheck. Maybe if we _only_ paid them $1 million per year with no bonuses and no golden parachute you’d get people who were interested in keeping the company alive for twenty years instead of someone who sacrifices the next 19 years of profit so they can get $10 million in bonuses then retire with a $10 million retirement package when the whole thing blows up in their faces.
Now which would you choose? $20 million in twenty years or $20 million in one year and retire 19 years early or better yet move to another company and do it again?
There is no incentive to stay with the company with the current executive pay scheme – just look at Bob Nardelli if you need a shining example of exactly what kind of behavior the incentives create.
Gotta love Cuomo’s style…Go get ‘em Andrew!
Every board member of every publicly held company should read and memorize that letter. That is how much they should be demanding to know about the companies of which they are fiduciaries. It’s high time someone showed them how to do it, and if it was Cuomo who had to step up, so be it.
Boards of Directors are too often treated as some sort of ceremonial body, and they shouldn’t allow themselves to be treated as such. Their negligence and willful ignorance about what is really happening within the organizations enables the companies to run amok, ultimately running themselves into the ground. This time they have taken our economy down with them.
If you ever become the largest shareholder in a particular company, I imagine you’d want to know a thing or two about how they’re doing business.
To the people who are claiming that AIG is “contractually obligated” to pay these bonuses, I have one simple question for you:
Do you honestly believe that AIG, when it’s pricey lawyers were drafting the employment contracts, put a clause in there that said “you, as an employee are guaranteed your bonus no matter what. In the event that you do a terrible job, or the company goes under, you will still receive your bonus.”
I mean, come on now people, can we all just at least TRY and use a little brainpower when it comes to this story? Is it really that difficult?
@howtragic: … because certainly someone like a high-ranking executive earning these bonuses would not have their own pricey lawyer work through the contract deals.
Can you TRY to use a little brainpower when it comes to posting? Is it really that difficult?
@ZekeSulastin:
Of course both sides negotiated the contract, but seriously, Zeke, you cannot HONESTLY believe that a company as big as AIG forfeit their power to have at least some discretion when it comes to bonuses. Really? You cannot possibly be that naive, right?
And, before you lambast me again – I am a lawyer. I’ve read over PLENTY of contracts. And never have I seen a party as sophisticated as AIG do something that stupid.
And…..OF COURSE the execs are going to fight it if they don’t get their bonuses. OF COURSE. But, please do not think for a second that because they filed a lawsuit they are in the right.
Andrew Cuomo – a grandstanding headline skank.
I don’t like what AIG did, but Cuomo cannot go on a fishing expedition just because a company did something legal that he didn’t agree with. He has to have some legal grounds.
If I were AIG, I’d go to court to block the request since compensation contracts are private personal information and also are confidential information which would cause competitive disadvantage if made public.
About the only thing the Feds can do with AIG is to not extend any more funds. Second, since the Feds now own a vast majority of AIG stock, they could demand the firing of the CEO and other directors – but they probably wouldn’t do that as they need to
keep the company viable.
@howtragic:
Apparently the pricey lawyers have already spoken, and the answer is- they are either getting paid or we’re going bankrupt.
And if I remember correctly, the whole point of giving them, what -$40 billion is it?- was to keep them from going bankrupt. I’m not sure I have a problem with them going bankrupt at this point, but let’s be clear about it.
If Sheriff Cuomo goes after these bonuses and then, what, exactly? AIG goes under, and we as taxpayers lose $40 billion, which then will cause all the nasty stuff they were afraid of last year. We won’t see a penny of that money. I’m not sure I see the upside here.
@IamNotToddDavis:
I never said fighting a lawsuit would not cost money. I’ve seen it first hand. Naturally people who do not get what they think they deserve are going to fight it.
My only point is this: the American public should not be so fucking stupid to believe that AIG employment contracts are ironclad in favor of the employee’s bonus IN ALL CIRCUMSTANCES. That’s just downright ridiculous.
BTW, as a taxpayer, I would rather spend double on legal fees and deny these “talented” execs their bonuses. I think at this point, we’re down to the nitty gritty – we need to prove our point.
TAKE THE MONEY BACK!!
Correction from above: we’ve given AIG approximately $173 billion.
Money well spent, eh?
Where is our scape goat?? If this were China we would have shoot at least 5 top execs so we could feel better about it and things could continue as usual. The problem is the whole corp exec compensation package is broken. Large corps will be our downfall not our saviors. This is not new do a little digging in history and see what we are repeating. Start with Andrew Jackson and the bank of the United States.
Families today are struggling with their home mortgages. All of these families suffer greatly from the inability to borrow if they miss or delay payments. Policy makers from both parties step aside to avoid the issue. Why? It may be because of the inability to relate to the ordinary American truly in financial trouble. The impotent comment; “we cannot reward bad decisions by homeowners”. “I have a hard time feeling sorry for the homeowner who borrowed more than he could ever hope to pay.” Americans are pissed! It is also an amazing side step in logic by politicians since we’ve recently tried to bail out Bear Stearns, Fannie Mae (NYSE: FNM), Freddie Mac (NYSE: FRE), and AIG (NYSE: AIG), and Citibank. Now they are paying hundreds of millions in bonuses with the homeowner’s tax dollars in spite of their enormously bad financial management. While foreclosed homeowners sit and wait for better times, the government will send more bail-out money to big bank and automakers and AIG executives so they can keep their homes and good credit standing. There appears to be a marked bias in their favor for preferential treatment. There is a movement to remove the credit score rating system from the lending equation for secured loans, crack down on verifying collateral to protect banks, and this will get lending going again for Americans who need it!
This guy rocks. I’m moving to New York and voting for him.
I know some of it (ok, most of it) is posturing, and I don’t necessarily believe AIG WON’T end up handing out the bonuses, but I love that they have to deal with this guy.
I hope they all have Cuomo-related stress heart-attacks!!
@valor77: I wonder how Cuomo’s cheerleaders would feel if the state and federal government extended their “you took taxpayer money so we own you mentality” to all recipients of federal or state aid (anybody here have federally subsidized student loans or grants? tax credits? tax rebates? medicare recipients?). This is somewhat scary. I’m sure many of the same people were against the Patriot Act because they were worried about their “civil liberties.” This is the same man who has much blood on his hands for the housing crisis as was explained above by others… far from a hero and NOT rockin’.
If we didn’t give these morons our tax money in the first place they would have gone bankrupt. That would have cancelled all outstanding contractual obligations including bonus money. But we had to be good socialists and use the situation for a government power grab. Started with Bush and increased by Obama. Meet the new boss, same as the old boss.
If you’re getting paid by taxpayer dollars, isn’t your compensation and salary made public for transparency reasons?
I work at a public University and everyone’s salary is published yearly. I’m told it’s because we accept public funds.
Same deal for AIG.
Dear god, what a mess we’re in. I started to say “they’re in”, and then I realized… we’re all in it.
The ship’s sinking, and unfortunately, the ship is the freaking economy.
How can anyone be shocked that AIG is squandering our money on bonuses? The government gives away our money everyday with no oversight. Now all of a sudden Cuomo and company turn into Captain Renault and are shocked at what’s going on. When Pelosi travels on a scheduled flight and pays for it with her own money, then we will have real change, change even I can believe in.
The reason is AIG is technically an insurance company. There is no federal regulatory body for insurance company so they are subject to the regulations of the state they are in so this does in fact fall under the jurisdiction of the New York State Attorney General
May the force be with the NEW YORK A.G. I do not like New York but the A.G. has my co-operation. May he prosecute the whole bunch in AiG , if necessary
I like the outcome that this is working for, but that’s not enough for me to support the actions of the supreme policeman. I need to know also what laws he’s asking for this information under, because if he’s just extorting the information with the threat of a frivilous court action then we’re trading corporations running amok for politicians doing the same.
At some point EVERYONE has to begin playing by the rules, or otherwise this is just going to get dirtier.
This is a list of 22 people that work at AIG Financial Products Corp.
Joseph Cassano
President
+1.203.222.4700
jcassano@aigfp.com
William Kolbert
Chief Information Officer
+1.203.563.1901
kolbert@aigfpc.com
Kathleen Furlong
Vice President, Chief Financial Officer, and Treasurer
+1.203.222.4700
kfurlong@aigfp.com
David Ackert
Former Executive Vice President,
Transaction Development Group
+1.203.222.4715
david.ackert@aigfp.com
Thomas Kushner
Managing Director of FXPB Derivatives
+1.203.349.4373
kushner@aigfpc.com
James McGinnis
Managing Director
+1.203.222.4720
james.mcginnis@aigfpc.com
Salvatore Saieva
Vice President
+1.815.943.3590
salvatore.saieva@aigfpc.com
Ann Reed
Treasurer
+1.203.222.4700
reed@aigfpc.com
Nick Stephens
Vice President
+1.203.563.1928
nick.stephens@aigfpc.com
Joe Tom
Vice President of Information Technology
+1.203.222.4700
jtom@aigfpc.com
Michael Davis
Vice President
+1.203.261.6101
mdavis@aigfpc.com
Karen Dvorak
Trader
+1.203.222.4700
karen_dvorak@aigtrading.com
Jurgen Stoop
Assistant Vice President
+1.203.861.6170
jurgen_stoop@aigtrading.com
Dmitry Santanovsky
Assistant Vice President Software Development
+1.203.563.1900
dsatanovsky@aigfpc.com
Mitchell Bell
Assistant Information Technology Director
+1.203.222.4700
mitchell.bell@aigfpc.com
Henry Volquardsen
Manager, Interest Rates
+1.203.861.3566
hvolquardsen@aigtrading.com
Scott Bihl Manager
Fixed Income
+1.203.861.3566
sbihl@aigtrading.com