Washington, DC – Today, U.S. Senator Jeff Merkley of Oregon wrote to Treasury Secretary Timothy Geithner urging that he press other nations to participate in aiding financial markets, particularly given the newly disclosed fact that foreign banks are receiving bailout funds. Merkley also called on the Administration to enlist the aid of other nations in helping America recover bonuses paid to employees of bailed out financial institutions who live overseas, noting that the upcoming G-20 summit is an ideal opportunity to enlist global cooperation in the bailout of the financial markets.
“This is an international economic crisis and it requires an international response. American taxpayers have contributed billions to stabilize the financial markets – much of which is being directed to foreign banks,” said Merkley. “We expect that the governments of those nations would be eager to help stabilize their own financial institutions and would contribute to that effort as well.”
In the letter to Geithner, Merkley, joined by Senators Ron Wyden of Oregon and Sherrod Brown of Ohio, noted that $50 billion in funds provided to American International Group, Inc (AIG) had in turn been given to foreign financial institutions. This information had not been disclosed to Congress or the public until last week. They further pointed out that some of the recent recipients of AIG bonuses worked out of the London office of the AIG Financial Products division and that it would be difficult, if not impossible, to recoup those bonuses solely through the U.S. tax code.
The Senators are pushing Treasury Secretary Geithner to bring other nations into the fold by providing both bailout funds and assistance recovering AIG bonuses.
“The American people are outraged by the recently announced bonuses for AIG employees and by the disclosure that so much of the funding provided to AIG made its way to foreign financial institutions,” said Merkley. “It is absolutely critical that the nations which benefit from taxpayer funds help us recover the bonuses and further help us in bringing the downward cycle in our financial systems to an end.”
Full text of the letter is below.
March 24, 2009
The Honorable Timothy Geithner
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220
Dear Secretary Geithner:
We are outraged by the $165 million in bonuses that American International Group, Inc. (AIG) recently paid to its executives. In addition, we are deeply troubled by the recent disclosure that over $50 billion went to foreign financial institutions to unwind AIG’s toxic credit default swap transactions. We are writing now to urge you to use the upcoming meeting of The Group of Twenty (G-20) to enlist greater support from our allies in recouping the bonuses and further to demand greater international support for American efforts to stabilize the global system.
As you know, we are working to recoup AIG’s egregious bonus payments, and we recognize that your Administration is now taking strong action on the matter. More, however, needs to be done. Specifically, foreign cooperation is essential to capturing the entire bonus money paid out by AIG. Employees of AIG foreign subsidiaries, in particular those in the London office of the AIG Financial Products division, were the recipients of substantial amounts of bonus monies. Many, if not most, of these persons will fall outside of U.S. tax and regulatory jurisdiction, and accordingly U.S. legislative efforts will not be able to reach those bonuses. Foreign cooperation is essential to ensuring that foreign AIG executives do not wrongfully benefit from these abuses of American taxpayer support.
Moreover, the disclosure that over $50 billion of the payments to unwind toxic credit default swap transactions went to foreign financial institutions raises the question as to why other nations have not participated in the bailout of AIG. The wisdom of making counterparties whole is itself in debate. At a minimum, however, when U.S. taxpayer money is flowing to foreign institutions, the American people have a right to expect countries whose institutions benefit to share the burden.
We therefore ask that at the upcoming meeting of the G-20, you make every effort to secure the relevant international participation in any and all efforts ultimately pursued by the U.S. government to recoup the AIG bonuses. Moreover, we strongly encourage you to secure commitments from your foreign counterparts that their governments will participate in U.S.-led financial institution bailouts where monies will flow to companies or persons in their jurisdictions.
We greatly appreciate your attention to the concerns expressed in this letter and look forward to your response.