ALBANY, N.Y (AP) - New York campaign finance records show American International Group Inc. donated $100,000 to the state Democratic Committee just before Democratic Gov. David Paterson and his insurance superintendent launched marathon sessions to prop up the embattled insurer.
The contribution was made Aug. 29. Insurance Superintendent Eric Dinallo started negotiating with AIG and federal officials within about two weeks.
On Sept. 16, Paterson announced the “great news” that New York officials helped the giant insurer strike a historic loan deal with the Federal Reserve to keep AIG afloat.
A national consumer advocate called it a “classic example” of how insurance companies buy clout in states and in Washington.
“The governor had no knowledge of the donation which was used for events at the Democratic National Convention,” said June O’Neill, state Democratic Committee chairwoman, said in a prepared statement issued Thursday.
In New York, the governor is the head of his party. His spokesman, Errol Cockfield, also said Paterson didn’t know about the donation and is outraged by the actions of AIG leadership.
Washington lawmakers are blasting AIG for paying more than $160 million in bonuses to employees of a division primarily responsible for the meltdown that led to an $85 billion federal bailout of the company.
But Cockfield said Paterson’s “concern in September 2008, was for the financial stability of a major employer in the state and he and his administration acted in the best interest of New York’s economy, working in coordination with the Federal Reserve,” Cockfield said.
Paterson has directed Dinallo “to do whatever is necessary to protect the taxpayers,” Cockfield said.
Dinallo “independently initiated the Sept. 13 meetings with AIG and federal officials,” said Dinallo spokesman David Neustadt. “He acted solely in his capacity as insurance regulator. He had no knowledge of any donations to the New York State Democratic Party until today.”
The state’s effort is credited with giving AIG time to survive.
AIG spokeswoman Christina Pretto said the donation was made well before the company received any government aid.
“It was entirely appropriate,” she said. “Any suggestion of a connection between the two is wrong.”
Yet it was the biggest campaign donation AIG made within New York state since electronic record keeping began in 1999, records show. The biggest checks were for $10,000 each in 1999, 2000, 2002 and 2003, all to the same state Democratic Committee. There were national party conventions in 2000 and 2004.
AIG has donated to New York Democrats and Republicans _ when they held the Senate majority _ but usually in much smaller amounts. Since January 2006, the largest single check had been for just $2,500. Most were for about $350 or $500.
Dinallo put together a $20 billion state plan that was supplanted by the federal bailout. The $85 billion federal loan saved thousands of jobs nationwide, protected insurance policy holders, and salved _ if temporarily _ the nation’s hemorrhaging financial markets while protecting New York City’s financial sector.
Bob Hunter, director of insurance for the Consumer Federation of America, was one of the consumer advocates who criticized the deal last September, while it was widely praised on Wall Street and in government.
“It was terrible,” he said Thursday. He said the New York deal sought to use money set aside to protect insurance policy holders to save AIG, which he said endangered individual policy holders.
“Money is so pernicious and sort of evil the way it interlaces into politics,” he said. “This is just a classic example.”
AIG gave nothing to Democratic Attorney General Andrew Cuomo, who is now hitting AIG over the bonuses, according to state records. In 2002, the company gave $5,000 to Eliot Spitzer’s second campaign for attorney general.