Dear Inspector General Thorson:
I am writing to ask you to initiate an inquiry, in whatever form you believe most appropriate, into the role, if any and actions of the Department of the Treasury (Department) in the decision by American International Group (AIG) to pay bonuses of over $160,000,000 to AIG employees. AIG is largely funded and controlled by the U.S. Government, after having incurred massive losses from ill-conceived and executed investments and transactions. Indeed,
AIG received more than $170 billion in government rescue funds and I am concerned to see taxpayer money being used to pay bonuses to employees associated with these massive problems.
I request that you, among other things:
• determine the terms by which the Department provided funding to AIG, and particularly whether or not Treasury officials made any effort to forestall payments of bonuses or demanded waivers of bonuses prior to releasing any taxpayer funds;
• determine when the legal obligations were incurred; and
• whether these bonuses are compelled by contracts between AIG and its employees.
In so doing, I request that you obtain and analyze such contracts and determine how the obligation to pay bonuses is established, for example by individual performance or overall corporate performance.
In addition, it has been reported that the Treasury Department and the Federal Reserve took every legal step possible, but unfortunately were unable to stop AIG’s decision to pay out the bonuses. As it appears that the Department’s Office of General Counsel and others, were largely involved in these matters, I believe it is appropriate that you obtain the information I am seeking.
I appreciate your cooperation and assistance in getting the facts regarding this troubling matter.
Sincerely,
Charles E. Grassley of Iowa United States Senator Ranking Member of the Committee on Finance
