Angry Obama vows to try to block AIG bonuses

Angry Obama vows to try to block bonuses
President calls $165 million in bonuses an 'outrage to the taxpayers'

WASHINGTON - Joining a wave of public anger, President Barack Obama blistered insurance giant AIG for “recklessness and greed” Monday and pledged to try to block it from handing its executives $165 million in bonuses after taking billions in federal bailout money.

“How do they justify this outrage to the taxpayers who are keeping the company afloat?” Obama asked. “This isn’t just a matter of dollars and cents. It’s about our fundamental values.”

Obama aggressively joined other officials in criticizing American International Group, the company that is fast becoming the poster boy for Americans’ bailout blues.

The bonuses could contribute to a backlash against Washington that would make it tougher for Obama to ask Congress for more bailout help — and jeopardize other parts of the recovery agenda that is dominating the start of his presidency. Thus, the president and his top aides were working hard to distance themselves from the insurer’s conduct, to contain possible political damage and to try to bolster public confidence in his administration’s handling of the broader economic rescue effort.

David Axelrod, senior adviser to Obama, said in an interview with The Associated Press that there was no question that the bonuses and the public’s anger over them could run many things off the rail. “People are angry because they’ve seen exhibit after exhibit of irresponsibility and people walking away with money in their pockets,” he said. “It’s undermined the discussion that we have to have.”

Obama had scheduled a speech Monday to announce new help for recession-pounded small businesses. But first, he said, he had a few words to say about AIG. He lost his voice at one point and ad-libbed, “Excuse me, I’m choked up with anger here.” It was just a light aside, but he meant the sternness of his remarks to come through.

“This is a corporation that finds itself in financial distress due to recklessness and greed,” Obama declared.

He said he had directed Treasury Secretary Timothy Geithner to “pursue every legal avenue to block these bonuses and make the American taxpayer whole.”

Later, White House spokesman Robert Gibbs said the administration would modify the terms of a pending $30 billion bailout installment for AIG to at least recoup the $165 million the bonuses represent. That wouldn’t rescind the bonuses, just require AIG to account for them differently.

He said the administration hoped the tough talk would result in voluntary action on the part of AIG and its bonus recipients, although that remains an open question. “All we can do is administer this thing going forward,” he said.

On a separate track, New York Attorney General Andrew Cuomo said Monday he would issue subpoenas for information on the bonuses after AIG missed his deadline for providing details. Cuomo said his office would investigate whether the employees were involved in AIG’s near-collapse and whether the $165 million in bonus payments were fraudulent under state law.

AIG spokeswoman Christina Pretto told The Associated Press, “We are in contact with the attorney general and will of course respond to his request.”

One reason that the AIG bonus giveaway is such a compelling story — and a politically troubling one for Obama if not neutralized — is that it offers a simple story line that appears to sum up ways in which the federal bailouts have gone awry.

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