Obama: AIG Can’t Justify ‘Outrage’ of Bonuses

Barack Obama Financial Crisis President Barack Obama declared Monday that insurance giant American International Group is in financial straits because of "recklessness and greed"

by The Associated Press

Published: Mon, March 16, 2009 - 10:46 am CST

President Barack Obama declared Monday that insurance giant American International Group is in financial straits because of "recklessness and greed" and said he intends to stop it from paying out millions in executive bonuses.

"It's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay," Obama said at the outset of an appearance to announce help for small businesses hurt by the deep recession.

"How do they justify this outrage to the taxpayers who are keeping the company afloat," the president said.

Obama spoke out in the wake of reports that surfaced over the weekend saying that financially strapped American International Group Inc. was paying substantial bonuses to executives.

Noting that AIG has "received substantial sums" of federal aid from the federal government, Obama said he has asked Treasury Secretary Timothy Geithner "to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole."

Said Obama: "All across the country, there are people who work hard and meet their responsibilities every day, without the benefit of government bailouts or multimillion-dollar bonuses. And all they ask is that everyone, from Main Street to Wall Street to Washington, play by the same rules."

"This isn't just a matter of dollars and cents," he added. "It's about our fundamental values."

The $165 million was payable to executives by Sunday and was part of a larger total payout reportedly valued at $450 million. The company has benefited from more than $170 billion in a federal rescue.

AIG reported this month that it had lost $61.7 billion for the fourth quarter of last year, the largest corporate loss in history. The bulk of the payments at issue cover AIG Financial Products, the unit of the company that sold credit default swaps, the risky contracts that caused massive losses for the insurer.

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cork Says:

Mon, Mar 16, 2009 at 6:28 pm

Who is the stupid ones, let see. They have been given billions(by us)because we gave the company the money to get back the economy and they gave their executives (which is legal) millions of dollars in bonus checks for doing such a good job!!! Maybe they are not so stupid after all.

framkly Says:

Mon, Mar 16, 2009 at 11:17 am

This loop hole should of been plugged before any tax payers money was given to AIG. However, who in the USA work force would turn down a bonus? Would you?