Bailout Fallout

AIG Fails to Pay Back Bonuses

Earlier this year, New York Attorney General Andrew Cuomo struck a deal with American International Group: Cuomo would not publicize the names of employees who received $165 million in bonuses from the Financial Products division—which handled the risky credit derivatives that brought the firm down—if those employees would voluntarily return $45 million of that money. Now, as the year's end approaches, only $19 million has been returned and the company is heading for a showdown with the federal government. Pay czar Kenneth R. Feinberg is adamant that the bonuses be returned, but dozens of employees are lawyering up in case the government or AIG attempts to block the bonuses. A lawyer for one group of employees says they have a contractual right to the bonuses, and emphasized that in March the company told employees that their offers to return bonus payments were voluntary and nonbinding.