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U.S. Treasury Secretary Timothy Geithner said Wednesday that insurer AIG’s multimillion-dollar bonus contracts were “outrageous,” but Congress can help recoup these payments by passing an Obama administration proposal to levy fees on large financial firms.
“Those contracts were outrageous and should have never been permitted,” Geithner said in testimony to the U.S. House of Representatives Ways and Means Committee.
American International Group Inc is readying another round of payments to employees of its Financial Products unit — largely blamed for making bad bets on credit default swaps that brought the firm to the brink of collapse — that are expected to reach about $100 million.
AIG said late on Tuesday that these employees had agreed to reduce their bonuses by about $20 million, short of a $26 million target.
(Reporting by David Lawder; Editing by Padraic Cassidy)