Connecticut State Attorney General Richard Blumenthal says Connecticut law should not be an obstacle to recouping American International Group Inc. retention bonus payments.
Blumenthal made that comment Tuesday, in response to testimony that Federal Reserve Chairman Ben Bernanke gave before the House Financial Services Committee on bonuses paid to AIG Financial Products Corp. unit employees.
Problems at the financial products unit forced AIG, New York, to turn to the federal government for help in September 2008.
Bernanke said he had asked that bonus payments to AIG Financial Products unit employees be stopped.
Bernanke said he was told that the bonuses “were mandated by contracts agreed to before the government’s intervention.”
When he asked “that suit be filed to prevent the payments… legal staff counseled against this action, on the grounds that Connecticut law provides for substantial punitive damages if the suit would fail. Legal action could thus have the perverse effect of doubling or tripling the financial benefits to the AIG-FP employees,” Bernanke testified.