Mar 21 2009
Senator Warner is continuing to push federal regulators to use their existing authority to recover improper and inappropriate bonus payments made to certain executives at AIG and other financial firms receiving federal bailout assistance.
In a letter to the Acting Director of the federal banking regulatory agency, Senator Warner followed-up on his questioning from Thursday's Banking Committee hearing. Senator Warner says OTS and other federal regulators already are authorized by the Federal Deposit Insurance Act "to take action" against the payors and receivers of bonuses if they "have engaged or participated in unsafe or unsound practices."
He wrote in his letter:
"I believe that we are in a new era, and that the financial failures of the recent past provide clear evidence that the incentives and payments created by existing compensation practices were unsafe and unsound."
Palakoff said on Thursday OTS was no longer the regulator of AIG once the Treasury Department took an ownserhip stake in the company.
"This answer contradicts my understanding of AIG's current ownership structure," Senator Warner wrote in his letter asking OTS to justify why it hasn't acted.
In an interview with Bloomberg News, Senator Warner said:
“I’m going to push them to explain to me why they haven’t used this tool. When you don’t have the response coming out of the regulators, what you have now with the AIG case, you’ve got Congress rushing to fill the void on kind of a one-off circumstance.”
Click here to read Senator Warner's letter to the head of the OTS.