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Cuomo Puts Freeze on AIG Golden Parachutes

October 23, 2008

New York, NY - The "freeze" is on, for hundreds of millions of dollars worth of executive compensation for insurance giant AIG. Attorney General Andrew Cuomo says taxpayers must come first.

New York is contributing more than $62 billion in tax dollars toward the Wall Street bailout plan, and Cuomo insists that taxpayers in the state have a major stake in how companies like AIG will spend the bailout funds they receive. According to Cuomo, AIG has agreed to freeze a total of $600 million, including a $19 million "golden parachute" for ex-CEO Martin Sullivan.

No such payments should be made, says Cuomo, until taxpayers recover the $120 billion they poured into AIG, plus interest.

"If a company required the bailout, it's evidence that the management failed. And, if the management failed, why are the taxpayers rewarding them?"

Joan Entmacher, with the National Women's Law Center, agrees. In her view, it's important that public officials prohibit extravagant spending by corporations that are being helped by U.S. tax dollars.

"You could provide health insurance for nearly 2.2 million children for a full year with just one-tenth of the money that New York is contributing to the bailout. He (Cuomo) doesn't have to recover all of it - just a piece of it would go a long way."

Cuomo wants AIG to be seen as an example to other firms that will benefit from the Wall Street bail-out. If his staff uncovers evidence of extravagance, he says, he'll go after the company and attempt to recoup misspent tax dollars.

"Step One, freeze the outflow and stop the hemorrhaging. Then, Step Two - recapture, to the extent that you can. Step Two is a more ambitious undertaking."

AIG's new chairman, Edward Liddy, has said the company reviewed the situation and has agreed to the freeze.

Michael Clifford/Don Mathisen, Public News Service - NY