HARTFORD, Conn. — An executive of American International Group Inc. faced Connecticut lawmakers Thursday and defended $165 million in bonuses, saying they were necessary to keep valuable employees so the financial products division could be wound down.
Stephen L. Blake, head of human resources for the division headquartered in Wilton, Conn., said the bonus program was established last year before the insurance giant received a $182.5 billion federal bailout.
None of "the architects" of the problems that helped sink AIG as a whole last year, namely the sale of derivatives known as credit default swaps, have received the retention payments, Blake said.
"The program did what it was supposed to do, and that was to retain employees," Blake told members of the General Assembly's Banks Committee. "As hard as people are working today, they know at the end of the day this business is going to be gone."
The employees are now closing out the division's $2.7 trillion book of business. The portfolios contain numerous interlocking contracts. In recent months, the number of those contracts and AIG's exposure has slowly been reduced.
Blake acknowledged at Thursday's daylong hearing that he couldn't provide the state lawmakers with any information beyond what AIG's CEO, Edward M. Liddy, recently told Congress about the bonuses, which created a public and political uproar.
AIG offered up Blake's testimony Thursday as a compromise to the committee leaders, who last week issued subpoenas to more than a dozen AIG executives, including Liddy, demanding that they appear at the state Capitol to answer questions about the bonuses.
The AIG executives were reluctant to appear Thursday because many have received death threats since news of the bonuses broke.
Despite Blake's appearance, the subpoenas remain in force. Rep. Ryan Barry, D-Manchester, the committee co-chairman, said Blake's testimony was the "first stage" of compliance with the legislative subpoenas.