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Former TARP Oversight Panelists Say AIG Should Not be Allowed Deferred Tax Assets

MAR. 12, 2012

Former TARP Oversight Panelists Say AIG Should Not be Allowed Deferred Tax Assets

DATED MAR. 12, 2012
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Former Members of Congressional Oversight Panel Condemn Stealth Bailout of American International Group (AIG): Failed Insurance Giant Should Not Get Special Deals to Avoid Taxes

 

March 12, 2012

 

 

BOSTON -- Congress should not allow American International Group (AIG) to avoid paying taxes for years into the future in addition to the $182 billion bailout the company has already received, said a bipartisan group of former members of the Congressional Oversight Panel for the Troubled Asset Relief Program. The group includes former Chair Elizabeth Warren and former panel members Damon Silvers, Mark McWatters, and Kenneth Troske.

When a company changes ownership, long-standing tax laws limit the extent to which it can offset future taxes with past losses. Beginning in late 2008, however, the Treasury Department quietly issued a series of notices that exempted AIG from those limits. This provided AIG an additional taxpayer subsidy: bailout money and a special tax break that some estimate has contributed to $17.7 billion in profits for the company. Today, the former members of the oversight panel called for Congress to end the special tax deals and stop bailing out AIG.

"AIG gambled recklessly on mortgage-backed securities and lost," said Warren, former chair of the Panel. "When the government bailed out AIG, it should not have allowed the failed insurance giant to duck taxes for years to come. That kind of bonus wasn't necessary to protect the economy. It also gives AIG a leg up against its competitors at a time when everyone should have to play by the same rules -- especially when it comes to paying taxes," said Warren.

McWatters and Troske added in a joint statement: "This tax break only adds to the benefits received by the executives, shareholders and creditors of AIG, all of whom profited from the taxpayer-financed bailout. More important, this benefit exacerbates the distortions produced by Treasury's bailout of too-big-to-fail firms while also allowing Treasury to further mask the true cost of the TARP."

Silvers added: "Exempting AIG from the normal corporate tax rules is harmful to the public interest. This corporate tax break transfers public money to AIG's private shareholders and inflates executive pay at AIG -- both at the public's expense."

The group agreed that Washington needs to stop doing special deals for too-big-to-fail companies that hurt American families, and that a good way to start is for Congress to stand up, end these special tax breaks and make companies like AIG pay their fair share.

The Congressional Oversight Panel was established by the Emergency Economic Stabilization Act, passed by Congress in October 2008, and completed its oversight work last year. The Panel had reviewed the AIG bailout for Congress in a 273-page report dated June 10, 2010.

Each member of the bipartisan oversight Panel was appointed by Congressional leadership: Warren was appointed by Senator Harry Reid; McWatters was appointed by Rep. John Boehner; Silvers was appointed jointly by Rep. Nancy Pelosi and Senator Harry Reid; and Troske was appointed by Senator Mitch McConnell.

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