WASHINGTON (CNN) -- President Obama said Monday he will attempt to block bonuses to executives at ailing insurance giant AIG, payments he described as an "outrage."
"This is a corporation that finds itself in financial distress due to recklessness and greed," Obama told politicians and reporters in the Roosevelt Room of the White House, where he and Treasury Secretary Tim Geithner were unveiling a package to aid the nation's small businesses.
The president expressed dismay and anger over the bonuses to executives at AIG, which has received $173 billion in U.S. government bailouts over the past six months.
"Under these circumstances, it's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. I mean, how do they justify this outrage to the taxpayers who are keeping the company afloat?"
Obama was referring to the bonuses paid to traders in AIG's financial products division, the tiny group of people who crafted complicated deals that wound up shaking the world's economic foundations.
The president said he has asked Geithner to "pursue every single legal avenue to block these bonuses and make the American taxpayers whole."
Obama spared AIG's new CEO, Edward Liddy, from criticism, saying he got the job "after the contracts that led to these bonuses were agreed to last year."
But he said the impropriety of the bonuses goes beyond economics. "It's about our fundamental values," he said.
"All across the country, there are people who are working hard and meeting their responsibilities every single day, without the benefit of government bailouts or multimillion-dollar bonuses. You've got a bunch of small-business people here who are struggling just to keep their credit line open," Obama said.
"And all they ask is that everyone, from Main Street to Wall Street to Washington, play by the same rules. That is an ethic that we have to demand."
Obama said he would work with Congress to change the laws so that such a situation cannot happen again.
Then, coughing, he added in jest, "I'm choked up with anger here."
Under pressure from the Treasury, AIG scaled back the bonus plans and pledged to reduce 2009 bonuses -- or "retention payments" -- by at least 30 percent. That has did little to temper outrage over the initial plan, however.
Obama received support from fellow Democrats, including Sen. Christopher Dodd, chairman of the Committee on Banking, Housing and Urban Affairs. "This is another outrageous example of executives -- including those whose decisions were responsible for the problems that caused AIG's collapse -- enriching themselves at the expense of taxpayers," the Democrat from Connecticut said.
He noted in a written statement that executives at other companies that received bailout funds have volunteered to forgo bonuses. "There's no reason why those at AIG shouldn't do the same," he said.
Later, Dodd told CNN he is considering an unusual approach to get the bonus money back.
"One idea we're kind of thinking about is a tax provision," the Connecticut Democrat said. "We have a right to tax. You could write a tax provision that's narrowly crafted only to the people receiving bonuses. That's a way maybe to deal with it."
Dodd said the notion is in the "earliest of thinking" and has not been settled on as a way to resolve the issue that has set off outrage in Washington and across the country.
"This is a corporation that finds itself in financial distress due to recklessness and greed," Obama told politicians and reporters in the Roosevelt Room of the White House, where he and Treasury Secretary Tim Geithner were unveiling a package to aid the nation's small businesses.
The president expressed dismay and anger over the bonuses to executives at AIG, which has received $173 billion in U.S. government bailouts over the past six months.
"Under these circumstances, it's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. I mean, how do they justify this outrage to the taxpayers who are keeping the company afloat?"
Obama was referring to the bonuses paid to traders in AIG's financial products division, the tiny group of people who crafted complicated deals that wound up shaking the world's economic foundations.
The president said he has asked Geithner to "pursue every single legal avenue to block these bonuses and make the American taxpayers whole."
Obama spared AIG's new CEO, Edward Liddy, from criticism, saying he got the job "after the contracts that led to these bonuses were agreed to last year."
But he said the impropriety of the bonuses goes beyond economics. "It's about our fundamental values," he said.
"All across the country, there are people who are working hard and meeting their responsibilities every single day, without the benefit of government bailouts or multimillion-dollar bonuses. You've got a bunch of small-business people here who are struggling just to keep their credit line open," Obama said.
"And all they ask is that everyone, from Main Street to Wall Street to Washington, play by the same rules. That is an ethic that we have to demand."
Obama said he would work with Congress to change the laws so that such a situation cannot happen again.
Then, coughing, he added in jest, "I'm choked up with anger here."
Under pressure from the Treasury, AIG scaled back the bonus plans and pledged to reduce 2009 bonuses -- or "retention payments" -- by at least 30 percent. That has did little to temper outrage over the initial plan, however.
Obama received support from fellow Democrats, including Sen. Christopher Dodd, chairman of the Committee on Banking, Housing and Urban Affairs. "This is another outrageous example of executives -- including those whose decisions were responsible for the problems that caused AIG's collapse -- enriching themselves at the expense of taxpayers," the Democrat from Connecticut said.
He noted in a written statement that executives at other companies that received bailout funds have volunteered to forgo bonuses. "There's no reason why those at AIG shouldn't do the same," he said.
Later, Dodd told CNN he is considering an unusual approach to get the bonus money back.
"One idea we're kind of thinking about is a tax provision," the Connecticut Democrat said. "We have a right to tax. You could write a tax provision that's narrowly crafted only to the people receiving bonuses. That's a way maybe to deal with it."
Dodd said the notion is in the "earliest of thinking" and has not been settled on as a way to resolve the issue that has set off outrage in Washington and across the country.
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plez sez: while taking taking taxpayer money with one hand, these guys are enriching their pockets with the other... this type of behavior is reprehensible.
if AIG is in such horrible shape financially, then how in the heck is anyone there eligible for a bonus? every bonus plan i have been involved with has been tied to individual and company performance. the company performance obviously trumps any individual gains by $173 billion!!!
~ ~ Citations ~ ~
Read the New York Times article about how Obama tells Geithner to go after AIG bonuses.
Read the Washington Post article about how President Obama is pissed off about the AIG bonuses.
Read the CNN.com article about Obama's outrage about AIG bonuses.
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