Obama Says Will Pursue AIG To Block Bonuses

Earlier we reported that AIG had decided to use the bailout money to give more than 100 million dollar bonsues (according to some estimates even more than that) while the rest of the country and the world is suffering in this recession. Later we showed how our tax dollars are at work at AIG. Now in a rare public show of anger president Obama said "This is a corporation that finds itself in financial distress due to recklessness and greed," referring to AIG.

Now president Obama is very much right in asking secretary of Treasury Tim Geithner to pursue "every legal" action to block the AIG bonuses. Obama also said the AIG bonus issue underscored the need for an overhaul of our financial regulatory system. One would thing AIG would not let things go this far. If the society with the president can't succeed in blocking AIG bonuses because of the legal limitations we just have to stop doing business with AIG and all the individuals and corporations that have received those bonuses.

Here is what the president has said about the AIG bonuses and the efforts to block them.

But before I talk about the new steps we’re taking to get credit flowing to small businesses across our country, I want to comment on the news about executive bonuses at AIG.

This is a corporation that finds itself in financial distress due to recklessness and greed.

Under these circumstances, it’s hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. How do they justify this outrage to the taxpayers who are keeping the company afloat?

In the last six months, AIG has received substantial sums from the US Treasury. I’ve asked Secretary Geithner to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole.

I know he’s working to resolve this matter with the new CEO, Edward Liddy, who came on board after the contracts that led to these bonuses were agreed to last year.

This isn’t just a matter of dollars and cents. It’s about our fundamental values.

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

That is an ethic we must demand.

What this situation also underscores is the need for overall financial regulatory reform, so we don’t find ourselves in this position again, and for some form of resolution mechanism in dealing with troubled financial institutions, so we have greater authority to protect the American taxpayer and our financial system in cases such as this. We will work with Congress to that end.

However, wait, there is more to this story. AIG ups security to its worldwide offices fearing public anger.