AIG not the only company to pay bail-out bonuses

March 19th, 2009 - 12:06 pm ICT by IANS  

Washington, March 19 (DPA) American International Group (AIG), under fire for paying $165 million in retention bonuses using government bail-out money, is not the only government beneficiary to have spent its money that way.
As AIG head Edward Liddy faced criticism on Capitol Hill Wednesday, a federal regulator defended a payment by Fannie Mae, the mortgage finance firm seized by the government last year, of $4.4 million to four top executives.

James Lockhart, director of the Federal Housing Finance Agency who spoke at a housing symposium in Washington, defended the practice of retention bonuses as a “reasonable … well-thought out plan,” Bloomberg financial news service reported.

Similar retention plans were in place for thousands of workers at Fannie and its sibling agency, Freddie Mac, according to a filing with regulators last month cited by Bloomberg.

Bonus payments by Freddie will be released in April.

Freddie lost more than $50.1 billion last year and has so far requested $44.6 billion in aid from the Treasury Department. Fannie booked $58.7 billion in losses last year and said it needs $15.2 billion in federal aid to remain solvent.

In another bail-out bonus situation, Merrill Lynch, acquired by Bank of America in a government-backed rescue measure last year, reportedly had a $3.6 billion bonus pool in December, the New York Times reported, citing a court transcript.

Bank of America has received upwards of $160 billion in government support and guarantees since the financial crisis began. New York State Attorney Andrew Cuomo is trying to force the bank to reveal the names and amounts of bonus recipients.

Last year, John Thain, the former head of Merrill Lynch, spent $1.2 billion on redecorating his office even as his company lost more than $20 billion. He resigned Jan 22 and vowed to pay back the redecorating costs.

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