March 19, 2009

             LANSING - Attorney General Mike Cox today announced that his office, along with other state attorneys general, sent a letter to AIG demanding very specific information about bonus payments to AIG employees.  AIG has recently paid employee bonuses of approximately $165 million, Cox and the other state attorneys general want to know if tax dollars were used to reward the employees responsible for AIG's collapse.

"Safeguarding taxpayer dollars is a top priority for my office," said Cox. "AIG has lost billions and is only surviving because of taxpayer-funded bailouts.  The taxpayers deserve clear and complete answers about why millions of dollars of their money is going to pay bonuses to some of the very employees who contributed to the current financial crisis."

AIG has been kept afloat by taxpayer-funded bailouts which already total nearly $170 billion.  Recently AIG posted a quarterly loss in excess of $60 billion.

AIG is a large multinational insurance corporation.  When the credit crisis erupted last fall, AIG was exposed to massive liabilities related to the sale of credit default swaps (CDS) - complex financial vehicles that essentially insure against defaults on bond payments.  These liabilities threatened AIG's survival.  Because of the reach of AIG throughout the world financial system, the Federal government decided it was "too big to fail" and stepped in to shore up AIG with taxpayer-funded bailouts. 

It has now come to light that last week, in the midst of this massive government support, AIG paid $165 million dollars in "retention bonuses" to employees ? including employees of the company's Financial Products Unit, the unit that sold the CDS responsible for AIG's collapse. 

In response to these payments, Attorney General Cox, together with other state attorneys general, has signed a letter from New Jersey Attorney General Anne Milgram demanding very specific information about the AIG bonus payments, including a list of who was paid bonuses, the amount of the bonuses paid, and copies of the employees' contracts.  The letter gave AIG five days to provide the information.

            Cox also filed for lead plaintiff status in a national securities lawsuit against AIG for misleading investors about the true value of the CDS's, which resulted in investors losing billions of dollars.

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