Lawmaker Wants Details on How AIG is Spending U.S. Loan

October 20, 2008

A top U.S. lawmaker has asked the chief executive of American International Group for details on how the company has used its $123 billion of taxpayer rescue funding so far.

Rep. Henry Waxman, chairman of the U.S. House Oversight and Government Reform Committee, also sought a list of events, retreats and conferences paid for by the company since January, in the letter sent Friday to CEO Edward Liddy.

Waxman’s panel recently grilled two former CEOs of the company for ignoring warnings about risky investments and a lavish conference that occurred days after the U.S. bailout.

The Federal Reserve has extended $123 billion in credit to the company, to help it avert collapse after $18 billion of losses over three quarters, mainly on complex securities tied to mortgages that have declined in value.

Waxman, a California Democrat, asked how much of the original $85 billion credit facility and a subsequent $37.8 billion securities lending agreement has been received so far.

He also sought “a detailed description” of uses of the funds, and identities of counterparties to which funds were provided for collateral, among other details.

On Thursday, AIG said it would be recovering some executive payments and other compensation, including that of former CEO Martin Sullivan and the controversial head of its financial products unit, Joseph Cassano.

New York Attorney General Andrew Cuomo had threatened legal action over the spending.

Waxman’s committee has cited a conference AIG held days following the original government loan, with bills of about $230,000 for hotel, spas and other services.

AIG, in a letter to Treasury Secretary Henry Paulson following Waxman’s Oct. 7 hearing, said the event was “mischaracterized” in that most of the attendees were independent life insurance agents, and only 10 were AIG employees.

A representative from AIG had no immediate comment on Waxman’s latest request.

(Reporting by Kim Dixon; editing by Tim Dobbyn)

Topics USA Legislation AIG

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