That's how I imagine the meeting went where AIG decided to award more bonuses to executives next week.

You may recall that their previous round of bonuses were wildly unpopular with the public. This next round are actually bonuses delayed from 2008, seeing how 2008 was such a banner year for AIG.

In November, AIG's top seven executives, including Chairman Edward M. Liddy, agreed to forgo their bonuses through 2009. Then, in March, facing pressure from Treasury Secretary Timothy F. Geithner and other government officials, the company restructured its corporate bonus plans for the remaining top 50 executives. As part of this agreement, the senior executives were to receive half their 2008 bonuses — which totaled $9.6 million — in the spring, with another quarter disbursed on July 15 and the rest on Sept. 15. The last two payments would depend on whether the company made progress in revamping its business and paying back bailout money to taxpayers.

AIG plans to run the bonuses by Kenneth Feinberg, the Obama administration's compensation czar. Even though they don't technically need to. Maybe they're afraid of more taxpayers with torches if they don't.

AIG Seeks Clearance For More Bonuses [Washington Post]

(Photo: me and the sysop)

Responding to detailed questions from Rep. Elijah Cummings, AIG disclosed a new figure for its employee bonus pool — $454 million for 2008.

"I was shocked to see that the number has nearly quadrupled this time," said Cummings. "I simply cannot fathom why this company continues to erode the trust of the public and the U.S. Congress, rather than being forthcoming about these issues from the start."

POLITICO says that the last time they asked AIG about the total bonuses (which are different from and in addition to retention payments), they were given a figure of $120 million.

On March 19th, POLITICO asked AIG in an e-mail, "What was AIG's total bonus pool (outside the retention agreements) for 2008?" To that, after some back and forth, AIG offered the $120 million figure.

Later in March, Congressman Cummings submitted written questions to AIG, asking: "Please specify the exact amount in bonuses - not retention payments or any other form of compensation - paid by AIG to employees of any division of AIG in 2008 or paid in 2009 for work performed in 2008."

To that question, AIG disclosed a division by division breakdown of payments totaling $454 million.

AIG spokesman Ashooh said the company's revised accounting is the result of different wording of the questions asked by Cummings and POLITICO.

Just in time for the next round of Worst Company in America.

AIG bonus pool higher than reported [Politico via Gothamist]

Jake DeSantis writes:

DEAR Mr. Liddy,

It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:

I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in - or responsible for - the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.

After 12 months of hard work dismantling the company - during which A.I.G. reassured us many times we would be rewarded in March 2009 - we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.

I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down.

You and I have never met or spoken to each other, so I'd like to tell you about myself. I was raised by schoolteachers working multiple jobs in a world of closing steel mills. My hard work earned me acceptance to M.I.T., and the institute's generous financial aid enabled me to attend. I had fulfilled my American dream.

I started at this company in 1998 as an equity trader, became the head of equity and commodity trading and, a couple of years before A.I.G.'s meltdown last September, was named the head of business development for commodities. Over this period the equity and commodity units were consistently profitable - in most years generating net profits of well over $100 million. Most recently, during the dismantling of A.I.G.-F.P., I was an integral player in the pending sale of its well-regarded commodity index business to UBS. As you know, business unit sales like this are crucial to A.I.G.'s effort to repay the American taxpayer.

The profitability of the businesses with which I was associated clearly supported my compensation. I never received any pay resulting from the credit default swaps that are now losing so much money. I did, however, like many others here, lose a significant portion of my life savings in the form of deferred compensation invested in the capital of A.I.G.-F.P. because of those losses. In this way I have personally suffered from this controversial activity - directly as well as indirectly with the rest of the taxpayers.

I have the utmost respect for the civic duty that you are now performing at A.I.G. You are as blameless for these credit default swap losses as I am. You answered your country's call and you are taking a tremendous beating for it.

But you also are aware that most of the employees of your financial products unit had nothing to do with the large losses. And I am disappointed and frustrated over your lack of support for us. I and many others in the unit feel betrayed that you failed to stand up for us in the face of untrue and unfair accusations from certain members of Congress last Wednesday and from the press over our retention payments, and that you didn't defend us against the baseless and reckless comments made by the attorneys general of New York and Connecticut.

My guess is that in October, when you learned of these retention contracts, you realized that the employees of the financial products unit needed some incentive to stay and that the contracts, being both ethical and useful, should be left to stand. That's probably why A.I.G. management assured us on three occasions during that month that the company would "live up to its commitment" to honor the contract guarantees.

That may be why you decided to accelerate by three months more than a quarter of the amounts due under the contracts. That action signified to us your support, and was hardly something that one would do if he truly found the contracts "distasteful."

That may also be why you authorized the balance of the payments on March 13.

At no time during the past six months that you have been leading A.I.G. did you ask us to revise, renegotiate or break these contracts - until several hours before your appearance last week before Congress.

I think your initial decision to honor the contracts was both ethical and financially astute, but it seems to have been politically unwise. It's now apparent that you either misunderstood the agreements that you had made - tacit or otherwise - with the Federal Reserve, the Treasury, various members of Congress and Attorney General Andrew Cuomo of New York, or were not strong enough to withstand the shifting political winds.

You've now asked the current employees of A.I.G.-F.P. to repay these earnings. As you can imagine, there has been a tremendous amount of serious thought and heated discussion about how we should respond to this breach of trust.

As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised. None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.

Many of the employees have, in the past six months, turned down job offers from more stable employers, based on A.I.G.'s assurances that the contracts would be honored. They are now angry about having been misled by A.I.G.'s promises and are not inclined to return the money as a favor to you.

The only real motivation that anyone at A.I.G.-F.P. now has is fear. Mr. Cuomo has threatened to "name and shame," and his counterpart in Connecticut, Richard Blumenthal, has made similar threats - even though attorneys general are supposed to stand for due process, to conduct trials in courts and not the press.

So what am I to do? There's no easy answer. I know that because of hard work I have benefited more than most during the economic boom and have saved enough that my family is unlikely to suffer devastating losses during the current bust. Some might argue that members of my profession have been overpaid, and I wouldn't disagree.

That is why I have decided to donate 100 percent of the effective after-tax proceeds of my retention payment directly to organizations that are helping people who are suffering from the global downturn. This is not a tax-deduction gimmick; I simply believe that I at least deserve to dictate how my earnings are spent, and do not want to see them disappear back into the obscurity of A.I.G.'s or the federal government's budget. Our earnings have caused such a distraction for so many from the more pressing issues our country faces, and I would like to see my share of it benefit those truly in need.

On March 16 I received a payment from A.I.G. amounting to $742,006.40, after taxes. In light of the uncertainty over the ultimate taxation and legal status of this payment, the actual amount I donate may be less - in fact, it may end up being far less if the recent House bill raising the tax on the retention payments to 90 percent stands. Once all the money is donated, you will immediately receive a list of all recipients.

This choice is right for me. I wish others at A.I.G.-F.P. luck finding peace with their difficult decision, and only hope their judgment is not clouded by fear.

Mr. Liddy, I wish you success in your commitment to return the money extended by the American government, and luck with the continued unwinding of the company's diverse businesses - especially those remaining credit default swaps. I'll continue over the short term to help make sure no balls are dropped, but after what's happened this past week I can't remain much longer - there is too much bad blood. I'm not sure how you will greet my resignation, but at least Attorney General Blumenthal should be relieved that I'll leave under my own power and will not need to be "shoved out the door."

Sincerely,

Jake DeSantis

Dear A.I.G., I Quit! [NYT]

From the WaPo:

Treasury Secretary Timothy F. Geithner is set to argue for the new powers at a hearing today on Capitol Hill that was scheduled to address the furor over bonuses paid to executives at American International Group, which the government has propped up with about $180 billion in federal aid. Administration officials say the proposed authority would have allowed them to seize AIG last fall and wind down its operations at less cost to taxpayers.

The government at present has the authority to seize only banks.

This would essentially cast the Treasury Department as a new "systemic risk regulator" with the power to deal with companies who, while they are not necessarily banks, are nevertheless "too big to fail." It was generally thought that the Federal Reserve would eventually take up this role.

The second part of the plan would give new "tools" to the Treasury that it could use to prevent the collapse of a company, including guaranteeing losses, buying assets or taking a partial ownership stake:

Such authority also would allow the government to break contracts, such as the agreements to pay $165 million in bonuses to employees of AIG's most troubled unit.

The Treasury secretary could act only after consulting with the president and getting a recommendation from two-thirds of the Federal Reserve Board, according to the plan.

What do you think?

Geithner to Ask Congress for Broad Power to Seize Firms [WaPo]

Well, it seems that there's a little rebranding going on. Click here to see what the building used to look like.

AIG told the NY Post that "the company had decided to replace the large AIG sign — outside the entrance to its property-casualty offices — as part of its plan to change that operation's name to AIU Holdings Ltd"

From the NYPost:

A rebranding to distance the giant insurer's sprawling operations across 130 countries away from the AIG name are likely to continue.

"I think the AIG name is so thoroughly wounded and disgraced that we're probably going to have to change it," Liddy told a U.S. House of Representatives subcommittee last Wednesday.

Any suggestions for him?

No AIG Here! Financial District Building De-AIGs Facade [Gothamist]
(Photo:Dan Albanese)

Mr. Cuomo says:

I have received the list of AIG FP employees who received retention payouts. Mr. Liddy testified in Congress yesterday that he intended to comply with our subpoena and expressed concern for employee safety. Mr. Liddy has in fact now complied with the subpoena. We are aware of the security concerns of AIG employees, and we will be sensitive to those issues by doing a risk assessment before releasing any individual's name. The Attorney General's Office is a law enforcement agency and is experienced in making these assessments.

As we perform our review, we will simultaneously be working with AIG over the next few days to determine which employees received payments and which chose to return the money they received.

The Attorney General's Office will responsibly balance the public's right to know how their tax dollars are spent with individual security, privacy rights, and corporate prerogative.

At this moment, with emotions running high, it is important that we proceed diligently, with care, reflection, and sober judgment.

We thank AIG for their compliance.

Do you think these names should be made public, or it enough that the Attorney General knows who they are?

ATTORNEY GENERAL CUOMO ANNOUNCES SIGNIFICANT DEVELOPMENT RELATED TO AIG [NY AG]

From the Washington Post:

The House bill would tax 90 percent of bonus income for individuals with a household income of at least $250,000. Senate Finance Chairman Max Baucus (D-Mont.) said the Senate bill would impose excise taxes of 35 percent each on both AIG employees and the company. Combined with the personal income tax paid by the executives, the Senate levy would capture more than 90 percent of the bonuses.

Separate provisions would target recipients who are foreign nationals. Both the Senate and House taxes would apply broadly to bonuses paid to employees of firms receiving government aid under the $700 billion Troubled Asset Relief Program (TARP), approved last year by Congress to prevent the collapse of the financial sector.

We suppose when all else fails, make the IRS do your dirty work....

House to Consider Tax on AIG Bonuses [WaPo]

"It was distasteful to make these payments," said Liddy. "This morning, I've asked the employees of AIG Financial Products to step up and do the right thing. Specifically, I've asked those who received retention payments in excess of $100,000 or more to return at least half of those payments."

When asked by Chairman Barney Frank if he would agree to provide the names of the bonus recipients to the committee, Liddy agreed on the condition that they would remain confidential.

Frank refused to promise confidentiality and informed Liddy that he will subpoena the information if it is not provided. Liddy responded by reading from a recent death threat that suggested AIG employees and their families should be executed "with piano wire," claiming that releasing the names would endanger the lives of AIG employees.

Chairman Frank explained that the Congress would follow the advice of law enforcement and security advisers once the names were turned over, but that he was not persuaded by the death threat argument.

[CSPAN]

Cuomo also says that he's taken a look at the "independent legal analysis" that concluded that contracts prevented AIG from getting out of paying the bonuses:

"AIG now claims that it had no choice but to pay these sums because of the unalterable terms of the plan. However, had the federal government not bailed out AIG with billions in taxpayer funds, the firm likely would have gone bankrupt, and surely no payments would have been made out of the plan. My Office has reviewed the legal opinion that AIG obtained from its own counsel, and it is not at all clear that these lawyers even considered the argument that it is only by the grace of American taxpayers that members of Financial Products even have jobs, let alone a pool of retention bonus money. I hope the Committee will take up this issue at its hearing tomorrow."

Here's the full letter:

Honorable Barney Frank Chairman,
House Committee on Financial Services
United States House of Representatives
2129 Rayburn House Office Building
Washington, DC 20515

Re: AIG 2008 Retention Bonuses

Dear Chairman Frank:

I am writing to provide you and your Committee with information regarding an ongoing investigation my Office has been conducting of executive compensation at American International Group ("AIG"). I hope this information will be useful to the Committee at its hearing on AIG tomorrow.

We learned over the weekend that AIG had, last Friday, distributed more than $160 million in retention payments to members of its Financial Products Subsidiary, the unit of AIG that was principally responsible for the firm's meltdown. Last October, AIG agreed to my Office's demand that no payments be made out of its $600 million Financial Products deferred compensation pool. While this was a positive step, we were dismayed to learn after the fact that AIG had made multi-million dollar payments out of its separate Financial Products retention plan on Friday.
AIG now claims that it had no choice but to pay these sums because of the unalterable terms of the plan.

However, had the federal government not bailed out AIG with billions in taxpayer funds, the firm likely would have gone bankrupt, and surely no payments would have been made out of the plan. My Office has reviewed the legal opinion that AIG obtained from its own counsel, and it is not at all clear that these lawyers even considered the argument that it is only by the grace of American taxpayers that members of Financial Products even have jobs, let alone a pool of retention bonus money. I hope the Committee will take up this issue at its hearing tomorrow.

Furthermore, we know that AIG was able to bargain with its Financial Products employees since these employees have agreed to take salaries of $ I for 2009 in exchange for receiving their retention bonus packages. The fact that AIG engaged in this negotiation flies inthe face of AIG's assertion that it had no choice but to make these lavish multi-million dollar bonus payments. It appears that AIG had far more leverage than they now claim.

AIG also claims that retention of individuals at Financial Products was vital to unwinding the subsidiary's business. However, to date, AIG has been unwilling to disclose the names of those who received these retention payments making it impossible to test their claim. Moreover, as detailed below, numerous individuals who received large "retention" bonuses are no longer at the firm. Until we obtain the names of these individuals, it is impossible to determine when and why they left the firm and how it is that they received these payments.

If AIG were confident in its claim that those who received these large bonuses were so vital to the orderly unwinding of the unit, one would expect them to freely provide the names and positions of those who got these bonuses. My Office will continue to seek an explanation for why each one of these individuals was so crucial to keep aboard that they were paid handsomely despite the unit's disastrous performance.

As you may know, my Office yesterday subpoenaed AIG for the names of those who received these bonuses, and we plan to do everything necessary to enforce compliance. American taxpayers deserve to know where their money is going, and AIG's intransigence and desire to obscure who received these payments should not be tolerated. Already my Office has determined that some of these bonuses were staggering in size.

For example:

• The top recipient received more than $6.4 million;
• The top seven bonus recipients received more than $4 million each;
• The top ten bonus recipients received a combined $42 million;
• 22 individuals received bonuses of $2 million or more, and combined they received more than $72 million;
• 73 individuals received bonuses of $1 million or more; and
• Eleven of the individuals who received "retention" bonuses of $1 million or more are no longer working at AIG, including one who received $4.6 million;

Again, these payments were all made to individuals in the subsidiary whose performance led to crushing losses and the near failure of AIG. Thus, last week, AIG made more than 73 millionaires in the unit which lost so much money that it brought the firm to its knees, forcing a taxpayer bailout. Something is deeply wrong with this outcome. I hope the Committee will address it head on.

We have also now obtained the contracts under which AIG decided to make these payments. The contracts shockingly contain a provision that required most individuals' bonuses to be 100% of their 2007 bonuses. Thus, in the Spring of last year, AIG chose to lock in bonuses for 2008 at 2007 levels despite obvious signs that 2008 performance would be disastrous in comparison to the year before. My Office has thus begun to closely examine the circumstances under which the plan was created.

I look forward to continuing to cooperate with the Committee in any way possible to ensure that taxpayer funds are not misspent on unjustified bonuses or otherwise misused.

Andrew M. Cuomo ,
Attorney General of the State of New York

Re: AIG 2008 Retention Bonuses (PDF) [New York Attorney General's Office]

"We had given AGI up to 4 o'clock today to provide the information on the latest round of bonuses that they paid out," Cuomo told reporters. "Four o'clock has come and gone."

[Bizjournals] (Thanks, Tim!)

Grassley suggests:

"I suggest, you know, obviously, maybe they ought to be removed. But I would suggest the first thing that would make me feel a little bit better toward them if they'd follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide. And in the case of the Japanese, they usually commit suicide before they make any apology."

Somehow we doubt the AIG executives feel the same way...

GOP Senator Suggests AIG Bonus Execs Kill Themselves [Gothamist]

March 16, 2009

Edward M. Liddy, Chairman & CEO American International Group, Inc.
70 Pine Street New York, NY, 10270

Re: 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]

From ABC News:

"It's ridiculous," U.S. Rep. Elijah Cummings, D-Md., told "GMA," adding that he doesn't buy the notion that the government doesn't have enough control over taxpayer dollars to stop bonuses like these.

Sadly, most everyone else seems to be in agreement that the government has no power to stop AIG from going ahead with the bonuses — despite the fact that we are now its single largest shareholder. Fed Chairman Ben Bernanke told CBS' 60 Minutes that of all this meltdown nonsense it's the AIG bailout that makes him the angriest — and ABC News says that the chairman was so livid after hearing about the bonuses that he slammed the phone down.

"Let me just first say that of all the events and all of the things we've done in the last 18 months, the single one that makes me the angriest, that gives me the most angst, is the intervention with AIG. Here was a company that made all kinds of unconscionable bets. Then, when those bets went wrong, we had a situation where the failure of that company would have brought down the financial system," Bernanke said.

"You say it makes you angry?" Pelley asked.

"It makes me angry. I slammed the phone more than a few times on discussing AIG. I understand why the American people are angry. It's absolutely unfair that taxpayer dollars are going to prop up a company that made these terrible bets, that was operating out of the sight of regulators, but which we have no choice but the stabilize, or else risk enormous impact, not just in the financial system, but on the whole U.S. economy," Bernanke explained.

Ben Bernanke's Greatest Challenge [CBS]
From Outrage to the Future: Learning From the AIG Bonuses [ABCNews]
(Photo:ChristophrHiestr)

Here are the significant banks that were named in the report:

• Goldman Sachs,
• Morgan Stanley
• Societe Generale
• Calyon
• Deutsche Bank
• Barclays
• Rabobank
• HSBC
• Wachovia
• Merrill Lynch
• Banco Santander
• and Royal Bank of Scotland

How much money has gone to counterparties since the company's collapse? The person briefed on the deals put the figure at around $50 billion.

Unfortunately, that is likely to rise.

According to its most recent financial statements, A.I.G. had $302 billion in credit insurance commitments at the end of 2008. Of course, the company is not going to have to make good on all that insurance: the underlying securities are not all going to zero.

But as the economy deteriorates, A.I.G.'s insurance bets certainly become more perilous. And because most of A.I.G.'s swaps are known as the "pay as you go type," collateral must be supplied when the underlying debt declines in value. Swap arrangements made by other insurers require payments only if a default occurs.

So the meter is constantly running at A.I.G. Just as quickly as taxpayer funds flow into the firm, chunks of it go right out the door to settle derivatives claims.

So it goes.

A.I.G., Where Taxpayers' Dollars Go to Die [NYT]
Europe banks silent on reported AIG bailout gains [Reuters]

"Given the systemic risk AIG continues to pose and the fragility of markets today, the potential cost to the economy and the taxpayer of government inaction would be extremely high," Treasury said in its announcement.

So far, the government has spent $150 billion to keep AIG afloat.

If you'd like to read the statement by the Treasury Department, click here.

AIG suffers $62B loss, bailout revamped [CNNMoney]

CBS says:

On Wednesday, lawmakers grilled Assistant Treasury Secretary Neel Kashkari about AIG's bonus plan. Rep. Donald Manzullo, R-Ill., asked if a $3 million bonus was too much.

"It is excessive for a failing institution, yes," said Kashkari.

But so far, no one's stopping AIG from paying millions to some employees in its new retention program. The company has told 168 employees they'll receive between $92,500 and $4 million per individual if they stay with the company for one year. That angers some on Capitol Hill.

"These so-called retention payments are nothing less than bonuses," Rep. Elijah E. Cummings, D-Md., told CBS News. He sent letters to AIG, demanding details of the retention program.

Cummings went on to say that no one is indispensable when there are thousands of qualified people out of work on Wall Street. AIG responded that the payments were not "popular" but they were necessary to keep the business together so that they could eventually pay back taxpayers.

After Rescue, Bonuses Still Flow At AIG [CBSNews]

In the letter, AIG says they are "extremely grateful" for the support they have received from taxpayers, and as their way of showing how "prudently" they are acting, they will not be giving bonuses to their top seven executives. The rest will get bonuses, but won't be getting a raise this year.

They also promise that they are "developing" a way to insure that no taxpayer dollars are used for bonuses for the top 60 executives in the future.

Cuomo reacted favorable to the news, says ABC.

We believe AIG's step is a positive step," Cuomo said on a media conference call following the release of the letter. "I enocurage other Wall Street firms to wake up to the new reality on Wall Street and follow AIG's steps quickly."

Letter To Cuomo (PDF) [ABCNews]

From the WSJ:

Democratic Sen. Dianne Feinstein of California and Florida Republican Sen. Mel Martinez wrote to AIG Chief Executive Edward Liddy on Friday, telling him not to use its government loan to try and roll back tougher mortgage-industry licensing requirements and other controls.

The Wall Street Journal reported on Thursday that AIG was still engaged in a state-by-state effort to soften new federal regulations requiring mortgage originators get licenses and provide extensive background information. Abuses and fraud by mortgage originators helped ignite the crisis that threatened AIG with bankruptcy and forced the federal intervention.

Sens. Feinstein and Martinez sponsored the mortgage-oversight legislation, which Congress passed in July as part of a sweeping housing-industry rescue package.

"AIG has spent millions to lobby states to soften the licensing provisions, even after taxpayers loaned AIG more than $120 billion to prevent its collapse precipitated by excessive risk-taking," the senators wrote in their Friday letter to Mr. Liddy. "We find it unconscionable."

AIG to Halt Lobbying Efforts [WSJ]