AIG chief Edward Liddy will testify on Capitol Hill later this morning about almost $200 million in bonuses at the financial giant.
He will defend the payments that have caused outrage among politicians and taxpayers.
The bonuses went out in an effort to keep employees from fleeing the troubled financial products department. Liddy though still admitted the bonuses are probably distasteful in talks with Treasury Secretary Timothy Geithner
Geithner said he will deduct the cost of the bonuses from the pending $30 billion cash infusion to the insurance giant, bringing the total amount of taxpayer money to AIG to around $200 billion.
Geithner's statement was an attempt to calm the general publics outrage over the bonuses. AIG has beefed up security outside its suburban Connecticut office, amid reports of death threats and irate phone calls to employees, some of whom have submitted resignations.
Meanwhile, NYU finance professor Roy Smith said AIG can't afford to lose the top talent that received those payments.
"To risk having many of those people walk out of you, and have to replace them with people who are postal workers, is probably a foolish thing to do."
Liddy himself did not get a bonus. They range from $1,000 to $6.5 million.
New York Attorney General Andrew Cuomo reported that 73 AIG employees nabbed $1 million or more in bonuses, all of them in the derivatives unit that brought the company down.
Something is deeply wrong with this outcome, Cuomo wrote to U.S. Rep. Barney Frank, chairman of the House Financial Services Committee.
Frank now urges the Obama administration to fight the bonuses, more of which may be owed to AIG executives under various contracts.
Some Congressmen are threatening to slap such bonuses with a 60-100% tax.
President Barack Obama said Monday that the bonuses were an outrage, and has ordered Geithner to take all legal measures to block them.
Other members of Congress have taken shots at the AIG executives. Representative Sam Johnson (R-TX) said they should be "turned over to the marines," and Charles Grassley (R-IA) is raising eyebrows too.
"They need to either do one of two things...resign or go commit suicide."
Grassley also said the corporation is acting irresponsibly by giving bonuses made of taxpayer money in a Fox News interview yesterday.
And he's not the only one. Other lawmakers are working on a bill to tax those bonuses at one hundred percent. Senator Chuck Schumer (D-NY) said if the executives don't give the bonuses back, then they'll take them by force.
Sen. Christopher J. Dodd (D-CT), chair of the Senate Banking Committee is also calling for the repeal of the bonuses.
Connecticut lawmakers said yesterday they hope to change a state law thats being partially blamed by AIG as a reason for the bonuses.
The Wage Act allows employees to sue for twice the full amount of contractually owed wages in this case $330 million as well as attorneys fees if the employer refuses to pay.
One administrative worker said Financial Products has a reputation for paying out huge bonuses.
In her first year after being transferred there from another branch, the woman's annual bonus jumped from $12,000 to $40,000.
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