Congressman Bruce Braley, a Democrat from Waterloo, is questioning the executive pay at the insurance company that’s been bailed out with 85-billion dollars in taxpayers’ money. Braley spoke out during a House Oversight Committee meeting on Tuesday that examined the government bailout of AIG, especially pay for Joseph Cassano, head of AIG’s financial products division.
"The committee has examined Mr. Cassano’s pay and we were shocked to find that AIG paid him more than it paid its CEOs," Braley said "Over the last eight years he earned a total of $280 million in cash and most of that money came from a bonus program. For every dollar that Mr. Cassano’s unit made, 30 cents came back to him and the other financial products executives."
Cassano was responsible for investing in the subprime mortgages that eventually proved to be AIG’s downfall. "During his tenure at AIG, Mr. Cassano repeatedly denied that these swaps posed any risk to AIG or its shareholders." Braley said.
AIG posted over $11 billion dollars in losses in Cassano’s division this past February and Cassano was "terminated" from that division, but Braley points out Cassano was kept on the payroll. "AIG let him keep up to $34 million in uninvested bonuses," Braley said, "and, second, the company amazingly hired Mr. Cassano as a consultant for the sum of $1 million a month."
AIG had two different C-E-Os in the past 10 months and, according to Braley, one of them should have cut Cassano off rather than keep rewarding him financially. "There was ample justification based upon the misrepresentations made by Mr. Cassano and based on the financial peril he created for this longstanding company…and our entire financial marketplace," Braley said.
In August of last year, Cassano said publicly there was no scenario which would see AIG "lose even one dollar" over the mortgage deals he’d shepherded through. American taxpayers now own an 80 percent stake in AIG, as the Federal Reserve loaned the company $85 billion to save it from insolvency.