Last week, insurance giant American International Group (AIG) reported fourth quarter profits of nearly $20 billion. But almost $18 billion of that total didn't come from the insurance business. It came from a special federal tax giveaway.
AIG is the same large financial institution that the government bailed out to the tune of $182 billion in the midst of the financial crisis. AIG had gambled recklessly on mortgage-backed securities -- and lost. The government stepped in to keep AIG afloat and out of bankruptcy. Now, more than three years later, Washington is continuing to subsidize AIG with a special tax deal that allows it to avoid paying any taxes.
Today, I joined forces with a bipartisan group of my former colleagues on the Congressional Oversight Panel charged with oversight on the bank bailout to call on Congress to end AIG's ongoing bailout and special tax status. Enough is enough.
As chair of the oversight panel, I worked hard to protect taxpayers, to hold Wall Street accountable, and to ensure tough oversight of the Treasury Department for its implementation of the Troubled Asset Relief Program, or the TARP. That meant standing up to large financial institutions and exposing some of their back-room deals.
I think it's time AIG paid its fair share of taxes. Washington can't keep giving special breaks to big corporations while middle class families get stuck with the bill. That's what I believed as Chair of the oversight panel -- and it's what I believe now.
Beginning in 2008, the Treasury Department made a series of decisions to exempt AIG from tax laws that should have limited how much in past losses it could use to write off future taxes. That exemption gives AIG an advantage over its competitors with a bonus unnecessary to protect the economy. What's more, the special tax breaks also lead to higher corporate "profits" and inflate compensation for the company's executives.
Middle class families are still getting hammered, while Wall Street, the big banks and big corporations are getting special tax breaks. It isn't right. Everyone should have to play by the same rules.