Stephen Blake, head of human resources for the beleaguered American International Group’s financial products division, testified Thursday at a Banks Committee public hearing on the retention bonuses the insurance giant paid to its executives after it received federal bailout funds.
Blake agreed to testify after AIG’s attorneys and the co-chairmen of the Banks Committee spent several days negotiating the 14 subpoenas they had issued to the company’s executives, none of whom agreed to testify Thursday citing numerous death threats they had received.
Blake and AIG’s attorney Ross Garber of Shipman and Goodwin repeatedly told the committee he was unable to answer several questions regarding the company’s finances or the specifics about financial instruments, such as credit default swaps. Instead Garber and Blake continued to offer up Patrick W. Shea, AIG’s outside legal counsel who drafted the opinion on why Connecticut law forced it to make these retention payments to employees.
Garber told the committee that Shea cut his family vacation in California short in order to take a red-eye and be present at the hearing. He said Shea would be able to answer many of the committee’s questions.
Blake who joined the financial products division in September 2008 wasn’t able to offer much more than AIG CEO Edward Liddy did when he testified to Congress last week.
During a brief recess, Sen. Bob Duff, D-Norwalk, co-chairman of the Banks Committee said “I think it was good information.” He said Blake’s testimony was a good first step, but not the last step in understanding this issue.
“We’ll have to evaluate whether his testimony might have been better coming from someone else,” Attorney General Richard Blumenthal said of Blake’s testimony. “The criticism that the investigation was a waste of time is completely unfounded.”
“This committee has very credible legislative proposals to do what the federal government has failed to do,” Blumenthal said referring to regulating hedge funds, derivatives, and credit default swaps.
Blumenthal said the investigation is “appropriate” and “necessary”.
But Republicans on the committee felt otherwise. While many of them asked questions, none of the four Republican committee members felt the hearing was appropriate because the subpoenas were issued without the approval of the entire committee.
By the end of the day Thursday, the co-chairman agreed to allow Shea to testify.