Connecticut Attorney General's Office

Press Release

Attorney General To Fed Chair: Stop Additional $230 Million In AIG Bonuses Slated For Payment

March 27, 2009

Attorney General Richard Blumenthal -- in a letter today -- urged Federal Reserve Chairman Ben Bernanke to block another $230 million in AIG bonuses slated for payment, saying no Connecticut law impedes such action.

Earlier this week, Bernanke, echoing AIG's public reasoning for paying taxpayer-funded bonuses, told Congress that Connecticut's wage protection law prevented him from compelling AIG to block the bonuses.

Blumenthal said he respectfully disagrees with Bernanke's statement that Connecticut law requires AIG to make these payments, and urges immediate federal action to block the $230 million in bonuses.

Meanwhile, Blumenthal said that his office will continue to work with a coalition of state attorneys general to investigate AIG, including the details of the company's collapse, the possible misuse of federal bailout money, and compensation that encouraged financial gambling in derivatives like credit default swaps.

"By failing to block these bonuses, the Fed will be aiding and abetting AIG in squandering another $230 million in taxpayer dollars -- bringing the total to $448 million by next year," Blumenthal said. "The AIG Financial Products unit is supposedly winding down, but the bonuses are ratcheting up. According to the company's own documents -- confirmed by testimony yesterday -- the amounts go from approximately $218 million to $230 million.

"Contrary to AIG's claims, Connecticut law provides no roadblock to immediate federal action. The Federal Reserve must go ahead -- immediately -- to stop these supersized taxpayer-funded windfalls.

"Our message to the Fed: Don't be deceived by AIG's flawed legal bluffs. Connecticut's labor laws protect fair and lawful wages -- payments linked to specific and measurable work -- not runaway multi-million-dollar payments labeled retention bonuses.

"I will continue working as a member of a 19-state coalition of attorneys general to investigate the system of compensation and bonuses that created incentives for excessive risk taking in investments."