NY AG To AIG: Give Me Names, NumbersThe criticism of American International Group Inc. (AIG) over $165 million of bonus payouts has been withering. None more than from New York Attorney General Andrew Cuomo, who demanded 'Give me names of the executives receiving the bonuses and how much each one is getting.'
Since Sunday, AIG has been pounded by critics of the company's plan to use federal funds to pay out bonuses to top executives. The critics include President Barack Obama, who yesterday called the bonus payments an "outrage," demanding AIG rescind or repay them.
AIG has been pressed to open up and provide more details about its operations since taxpayers took over 80 percent of the company last year. On Monday, the company named at least 20 banks that got money to avoid losses after buying credit-default swaps from the insurer. Those derivatives were the cause of AIG's near collapse, and Obama says those traders who created or sold them shouldn't be rewarded with bonuses for failure. Those transactions are cited by experts as one of the triggers of the global credit crisis.
Cuomo's subpoena demands the names of the employees, their positions, job descriptions and information on their performance, as well as their employment contracts and who negotiated them, according to a letter Cuomo sent AIG on Monday. Cuomo's letter stated that he would subpoena the company if he didn't receive the information by 4 p.m. yesterday. He didn't receive the information by the deadline.
Obama wants Treasury Secretary Timothy Geithner to look into blocking payments, or ways to make AIG repay the $165 million. AIG says it is giving out the "retention pay" and bonuses because of legally-binding contracts.
Federal Reserve Looks for New Tools
At the start of a two-day policy meeting, the Federal Open Market Committee (FOMC) will look to employ new tools to pry open credit markets that have been frozen since the beginning of the current recession. Federal Reserve Board chairman Ben Bernanke and the FOMC are expected to leave unchanged the base lending rates at zero to 0.25 percent.
The regularly used tool of interest rate policy now at zero, the Federal Reserve will look to other ways to pump credit flow back into the economy. The Fed is already buying corporate commercial paper and mortgage securities and is poised to begin its new program to put $200 billion in consumer loans for auto, student and other loans.
Interviewed for the first time since becoming Fed Chair in 2006, Bernanke on Sunday predicted the recession would end this year, and recovery would begin in 2010.
Prosecutors Target Madoff's Assets
Federal prosecutors are now targeting assets of Bernard Madoff, who pled guilty to 11 charges in what is being called the largest Ponzi scheme ever. The now-disgraced financier and former Nasdaq chairman has assets valued at $820 million, a small percentage of the estimated $65 billion he took from his investors over a 13 year period.
The targeted assets for forfeiture include Madoff's $7 million Manhattan condo, as well as homes in Montauk, Long Island, NY, Palm Beach, FL, and Cap d'Antibes, France.
Madoff's wife Ruth holds many of the targeted assets, including the four homes. Prosecutors are looking at all insured and readily salable personal property contained in the homes, including cars, a yacht, three other boats, a Steinway piano, silverware, and $17 million in Wachovia Bank; $45 million in securities at COHMAD Securities, and Madoff's interest in the company. Just because many of the assets are under Ruth Madoff's name should not stop the government from seizing them. She was involved in the business and will have to prove the assets came from another source other than through Madoff's investment firm.
Madoff is in jail at the Metropolitan Correction Center in Lower Manhattan and faces a possible prison sentence of 150 years on the 11 criminal counts. He will be sentenced on June 16. Prosecutors are still probing for offshore accounts where Madoff may have stashed more money.