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U.S. President Barack Obama on Monday blasted insurance giant American International Group and pledged to try and prevent it from giving its executives 165 million dollars in bonuses after taking billions in federal bailout funds.
"It's hard to understand how derivative traders at AIG warranted any bonuses, much less 165 million dollars in extra pay," Obama said at the outset of an appearance to announce a plan to boost small businesses loans.
"How do they justify this outrage to the taxpayers who are keeping the company afloat," the president said, adding that the insurer is in financial straits because of "recklessness and greed. "
The president's remarks came as the financially strapped AIG, which Obama said has received "substantial sums" of aid from the government, was reported to be paying 165 million dollars of bonuses to its executives.
The 165 million dollars were payable to executives by Sunday and was part of a larger total payout reportedly valued at 450 million dollars.
Obama said he has asked Treasury Secretary Timothy Geithner to "pursue every legal avenue to block these bonuses and make the American taxpayers whole."
"This isn't just a matter of dollars and cents," the president said. "It's about our fundamental values."
AIG said on Saturday that the payments are legal because they were already promised in contracts signed with employees before the government provided the rescue aid.
Edward Liddy, AIG's CEO, told Treasury Secretary Timothy Geithner in a letter Saturday that the bonuses could not be cancelled altogether because the company would risk a lawsuit for breaching employment contracts.
Liddy also expressed concerns about whether changing the bonuses would lead to an exodus of talented employees needed to turn the company around.
As a response, the Treasury Department is planning to modify a planned 30 billion dollars rescue package to AIG, which was announced on March 2.
Officials said Monday that new provisions would be attached to the terms of the aid plan that will provide the company an additional 30 billion U.S. dollars in federal assistance.
Meanwhile, New York Attorney General Andrew Cuomo said his office on Monday issued a subpoena requesting that by late Monday AIG give more details of the bonuses, including each employees' job description and performance, and contents of the contracts under which the company has to make the payments.
Cumo said AIG missed the deadline and that he will continue to investigate the issue to find out whether the bonuses are fraudulent under New York state law.
AIG, the insurance giant that is now 80-percent owned by the U.S. government, lost 61.7 billion dollars in the fourth quarter of 2008, marking the largest corporate loss in history.
The company has so far received more than 170 billion dollars in a federal rescue. The latest funding was announced on March 2, which is intended to support AIG as it absorbs 60 billion dollars in quarterly losses and operational and competitive upheaval. |
