March 26 (Bloomberg) -- American International Group Inc., the insurer bailed out by the government four times since September, said its retention plan was designed with no knowledge of the current financial situation.
“The program was designed to retain employees for an ongoing business operation with no knowledge of the financial situation we’re in today,” said Stephen Blake, senior vice president of human resources for AIG’s Financial Products unit, speaking at a hearing before the Connecticut state legislature’s banks committee today.
“At that time there was very little understanding of what has happened in the financial markets in later 2008, especially the last part of the year,” he said. AIG’s Financial Products unit sold the credit-default swaps that almost bankrupted the company last year. AIG got a $182.5 billion U.S. bailout to prevent losses at financial firms that did business with the insurer.
Connecticut Attorney General Richard Blumenthal and legislators subpoenaed at least 12 current and former AIG employees including Chief Executive Officer Edward Liddy, to examine $165 million in retention pay at Financial Products. Lawmakers are reviewing how employees of the unit, with operations in Wilton, Connecticut, were compensated before and after the bailout in September and trying to identify regulatory gaps that contributed to the operation’s demise.
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