Geithner To Hold AIG to Repay Taxpayers on the Recent Monies Paid to Executives

Taxpayers will not foot the bill

March 17 (Bloomberg) — Treasury Secretary Timothy Geithner told leaders in Congress that he will ensure taxpayers aren’t footing the bill for American International Group Inc. to give bonuses to employees of the rescued firm.

Geithner has come under fire from Congress for presiding over AIG’s payment earlier this week of about $165 million in bonuses and retention pay to staff. The company has received about $170 billion in government bailout funds since September.

“We will impose on AIG a contractual commitment to pay the Treasury from the operations of the company the amount of retention rewards just paid,” Geithner wrote in a letter dated today and released by his department. “In addition, we will deduct from the $30 billion in assistance an amount equal to the amount of those payments.”

Geithner said he supports AIG Chairman Edward Liddy and called criticism of him “unjustified.”

“As long as he is there, we will work with him on measures to wind down AIG in an orderly way and protect the American taxpayer,” Geithner said.

The Treasury secretary said the government is trying to get back some of the $165 million paid to employees earlier this week. AIG said it was contractually obligated to give the money, and Geithner said in his letter that the Treasury’s lawyers agreed that “it would be legally difficult” to stop the payments.

“We are presently working with the Department of Justice to determine what avenues are available by which we can recoup the retention awards that have been paid,” Geithner said.