One of the largest beneficiaries of bailout money, American International Group, sparked outrage nationwide and at Boston University after it was revealed that it had spent $165 million on employee bonuses in March.
AIG has been the beneficiary of bailout funds four different times since September 2008. The federal government contributed about $180 billion dollars to the insurance giant to prevent its collapse.
After AIG’s announcement, President Barack Obama and his administration ordered an investigation into how the funds could be retrieved.’ However, AIG executives have said the bonuses were a contractual obligation from before the bailout.
AIG Chief Executive Edward Liddy told Congress he had already asked all bonus recipients making more than $100,000 a year to voluntarily surrender their bonus pay. The House responded by passing legislation that will tax all bonus money paid to employees of companies that received more than $5 billion in bailout money at a special rate of 90 percent, according to a March 19 New York Times article.
Boston University School of Law professor Jack Beerman said the AIG bonuses hinted at a larger problem in the culture of corporate America.
‘I think a lot of people in that business are overpaid,’ Beerman said. ‘I don’t know in this situation if these bonuses were appropriate. I don’t think taxpayers should be paying for the bonuses.’
Beerman understood Congress’ desire to recover the money quickly.
‘I think Congress is justified in wanting some of that money back, but I don’t know about the legality of [taxing bonuses at a special rate].’
College of Communication senior Gillian Driscoll said the bonuses showed a general disrespect for the American taxpayer.
‘Because the company went under and pretty much became owned by tax payers . . . when people
are losing jobs, it’s a slap in the face,’ Driscoll said.
She said the House took appropriate action by trying to recover the bonus money and ensure similar incidents do not happen in the future.
‘I think [a 90 percent tax on bonuses] is pretty fair considering times now . . . for this specific situation, it’s appropriate,’ Driscoll said.
Companies that cannot turn a profit and that have to ask the government for bailout money should not be giving bonuses to employees, School of Management senior Sergio Picon said.
‘[They] should be in prison,’ he said.
Although most students interviewed said the bonuses were uncalled for, SMG freshman Heather Lations said AIG had no choice but to hand out the bonuses.
‘It’s part of their salary,’ she said. ‘It’s an assigned part of their salary, so I think AIG was justified.’
Jake DeSantis, executive vice president of AIG’s financial products unit, sent his resignation letter into The New York Times Wednesday protesting the call for return of the bonuses.’ DeSantis had been working daily for $1 along with many other workers with the promise of a contractual bonus in March, he said in the letter
Staff writers Chonel LaPorte, Laura Horton and Crystal Rim contributed reporting to this article.
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