The state of Connecticut is analyzing the details of bonuses paid by American International Group
The list of remedies includes issuing a cease and desist order or getting restitution for the federal government, Commissioner Jerry Farrell said by telephone.
AIG's bonus payments have set off a national furor as the company stands to receive as much as $180 billion of taxpayer money to prevent it failing, a result that could imperil other financial giants that did business with it, Treasury officials say.
Democratic President Barack Obama over the weekend took a cautious approach to the issue, saying he was waiting to assess the legality of a bill that would impose a 90 percent tax on bonuses awarded by AIG or other companies that were bailed out with taxpayer money.
The bill imposing a 90 percent rate was approved by the U.S. House of Representatives but has stalled in the Senate. If the bill is passed into law, it would create a tax rate that would be just below the record federal tax rate of 94 percent in the last two years of World War Two.
AIG's money-losing financial products arm makes its home in Wilton, Connecticut, and the insurer has defended the bonuses, saying they were required under state law. However, Connecticut Republican Governor Jodi Rell last week ordered her consumer department to determine if the bonuses actually violated state law as they are against public policy.
AIG gave the consumer agency, whose role partly mirrors that of the Federal Trade Commission, and the state attorney general the same bonus details, Farrell said. But Democratic State Attorney General Richard Blumenthal said there were $218 million of bonuses, a higher figure than the $165 million the Connecticut governor said the company reported. This discrepancy will be probed, Farrell said.
The information, none of which we're releasing today, raises more questions that we want to meet with AIG on, Farrell said.
I can't stress enough that I haven't reached a decision, he said. I don't see the money going back to the State of Connecticut; obviously, the money comes from the federal government, Farrell added.
Though Connecticut's attorney general demanded the same bonus information from AIG, and urged its executives to return the money because they do not deserve it, he would need the consumer agency's permission to sue under the same law.
New Jersey on Friday said it was leading 19 states probing AIG's bonuses, and gave the insurer five days to respond.
A spokesman for New Jersey Attorney General Anne Milgram, who was appointed by Democratic Governor Jon Corzine, on Monday said AIG had yet to hand over the information.
New Jersey is cooperating with New York on its probe but wants the information directly from AIG, said Milgram's spokesman. New York's Democratic Attorney General Andrew Cuomo on Thursday said AIG gave him the bonus details he sought.
(Editing by Andrea Ricci)