HARTFORD, Conn. (Legal Newsline) - Connecticut Attorney General Richard Blumenthal said Tuesday that the Federal Reserve can not use the state's wage law as an excuse to not file a lawsuit against troubled financial services provider American International Group.
Federal Reserve Chairman Ben Bernanke told Congress Tuesday that a suit attempting to block $165 million in retention bonuses given out by AIG would be tricky because of the wage law cited by AIG as the reason it was required to dole out the bonuses.
"I respectfuly disagree with Federal Reserve Chairman Ben Bernanke's statement today that Connecticut law prevented a Federal Reserve lawsuit to block AIG bonues," Blumenthal said.
"The Federal Reserve never contacted me or my office concerning the applicability of the Connecticut wage law to the AIG bonuses. If the fed had called, we would have given the green light for litigation blocking these unconscionable bonuses."
AIG received more than $170 billion in taxpay money in the recent bailout of several financial institutions. Its subsidiary, AIG Financial Products, is based in Connecticut and was handing out the bonuses.
Blumenthal said the bonuses were not wages under the Connecticut Wage Protection statute, and called it a "joke of a justification to squander" taxpayer money.
Several of AIG's executives have agreed to return their bonuses.
From Legal Newsline: Reach John O'Brien by e-mail at firstname.lastname@example.org.