Obama angry over AIG’s huge bonusesMarch 17th, 2009 - 3:03 am ICT by IANS
Washington, March 17 (DPA) US president Barack Obama Monday added his anger to mounting criticism of the bailed-out insurance giant American International Group Inc (AIG) over its payment of huge bonuses and vowed to block them.
The firm has revealed it intends to hand out $1 billion in reward pay, including $165 million dollars already given to the very traders who sold financial instruments that helped trigger the global credit crisis.
“This is a corporation that finds itself in financial distress due to recklessness and greed,” Obama told a group of small business
owners. “I mean, how do they justify this outrage to the taxpayers who are keeping the company afloat?”
AIG head Edward Liddy described the bonus plans in a letter to US Treasury Secretary Tim Geithner over the weekend.
Obama said he had asked Geithner to “pursue every single legal avenue” to block payment of the bonuses. Meanwhile, in New York, Attorney General Andrew Cuomo has vowed to take legal steps by late
Monday if AIG does not divulge the names of bonus recipients.
Last year, the US government took 80 per cent ownership of the firm in exchange for its bailout of AIG, which has reached $200 billion over four successive rescue measures since September.
The firm is a key to the global crisis since it has insured so many of the shaky financial derivatives and instruments, such as
credit-default swaps and bundled mortgage securities, that have turned sour and eroded the financial system.
The bonus plans have stirred anew debate about how far the US government can go in dictating to private firms how they conduct their business, even if they are on a government lifeline. It has
also increased pressure for stricter regulation on the financial industry.
AIG claims it is legally obligated to pay the bonuses, which it says are needed to retain good talent andt were included in contracts
before the bailout.
The flamboyant Barney Frank, chairman of the House of Representatives financial services committee, told NBC news Monday that AIG was “rewarding incompetence.”
“These bonuses are going to people who screwed this thing up enormously, who made terrible decisions,” he said. “If they were in high school, they wouldn’t have gotten retention, they would have gotten detention.”
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