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Public anger over the bailout of U.S. financial firms is understandable, but taxpayers should know that American International Group plans to repay the money, chief executive Edward Liddy said in an opinion piece published in The Washington Post Wednesday.
“I am mindful of the outrage of the American public and of the president’s call for a more restrained compensation system. I am also mindful that every decision we make at AIG has consequences for the American taxpayer,” Liddy said.
Liddy was expected to face heated questions when he testifies before the House Financial Services Committee on Wednesday.
“Taxpayers should know that the government’s assistance to AIG has had a beneficial effect. The assistance has provided stability to the company and to the entire financial system,” Liddy said.
“Taxpayers should also know that AIG has a plan to return money to the government, and we are making progress,” he added.
So far, AIG has received $40 billion of the government’s $700 billion bailout of the financial industry. Earlier this month, the Treasury Department said it was ready to provide $30 billion more to AIG.
Liddy acknowledged the public outrage expressed on Monday about AIG bonuses.
“We are acutely aware not only that we must be good stewards of the public funds we have received, but that the patience of America’s taxpayers is wearing thin. Where that patience is especially thin is on the question of compensation,” Liddy said.
The Obama administration turned up the heat on AIG Tuesday over its employee bonuses, saying the embattled insurer will be forced to repay U.S. taxpayers before it gets another bailout of $30 billion.
On Capitol Hill, irate lawmakers moved quickly toward legislation that would slap a heavy tax on $165 million in bonuses paid by American International Group Inc.
AIG was due to have paid bonuses Sunday to employees of its financial products unit, which made bad bets on toxic mortgages and credit default swaps that hobbled the company.
“Make no mistake, had I been chief executive at the time, I would never have approved the retention contracts that were put in place more than a year ago,” Liddy said.
“It was distasteful to have to make these payments. But we concluded that the risks to the company, and therefore the financial system and the economy, were unacceptably high,” he added.
Liddy said AIG was continuing to pursue a strategy for recovery and appealed for patience.
“In America, when you owe people money, you pay them. We are pressing forward with our plan to return money to taxpayers, protect policyholders, and give employees a vision of success and a path for achieving it,” he said.
“With the understanding and patience of the American people and the continued support of the Federal Reserve and the Treasury, we can resolve AIG’s challenges and help its businesses contribute to a global economic recovery.”