TARP special master doubts AIG will repay all it owes

The special master for executive compensation under the Troubled Asset Relief Program told a congressional panel last Wednesday that he does not believe American International Group Inc. will repay all the money it has received from the federal government.

During a hearing on executive compensation before the House Oversight and Government Reform Committee, the panel’s top GOP member, Rep. Darrell Issa, R-Calif., asked Kenneth Feinberg if he agrees that AIG will be unable to repay all the government aid it has received since it almost collapsed in September 2008.

“I think that’s right,” said Mr. Feinberg, citing conversations he’s had with AIG officials.

According to its own analysis, AIG received about $182 billion in government assistance of various sorts, of which about $83 billion remains to be paid.

“Our goal is and always has been to repay the government,” an AIG spokesman wrote in an e-mail.

“We will have to sit down with AIG” early next year to discuss millions of dollars in bonuses slated to be paid next spring to employees of AIG Financial Products Corp., said Mr. Feinberg. The unit’s risky investment practices have been blamed for AIG’s near-collapse.

Two weeks ago, Mr. Feinberg said cash compensation for a dozen high-ranking AIG executives would be reduced severely, beginning next month. The cuts were to affect the 25 highest-compensated executives, but 13 have already left AIG.

During last week’s testimony, Mr. Feinberg told the committee that his office would turn its attention to compensation structures for the remaining executives, plus the 75 next-most-highly compensated employees in each of the seven companies covered by his office.

Regulations do not require him to make compensation determinations for each individual; rather, he must oversee the company’s overall compensation structure, he said.

Mark A. Hofmann is a senior editor at sister publication Business Insurance.