Outraged Obama vows to block AIG bonuses

[Windwaver]

Taken from http://sg.news.yahoo.com/afp/20090317/tts-...ig-972e412.html

 

WASHINGTON (AFP) - - President Barack Obama Monday vowed to block multi-million-dollar bonus payouts by bailed-out insurer AIG as he confronted intensifying public anger against Wall Street excess.ADVERTISEMENT

 

 

 

The controversy escalated as New York state Attorney General Andrew Cuomo started to slap subpoenas on American International Group, after the crippled firm ignored a Monday afternoon deadline to divulge details of the bonuses.

 

Conscious of the potential backlash as his administration readies new support for the financial industry, Obama said the planned bonuses for AIG executives and traders revealed over the weekend were an "outrage."

 

"This is a corporation that finds itself in financial distress due to recklessness and greed," he said, in a rare flash of public anger, at a White House event with owners of small businesses.

 

"Under these circumstances, it's hard to understand how derivative traders at AIG warranted any bonuses, much less 165 million dollars in extra pay," Obama said.

 

"How do they justify this outrage to the taxpayers who are keeping the company afloat?" he said, adding half in jest that "I'm choked up with anger here" as his voice caught at one point.

 

On Sunday, administration officials said there was little that Treasury Secretary Timothy Geithner could do legally to stop the bonuses, because they were promised under AIG employment contracts before the insurer was bailed out.

 

But Obama, noting the substantial government support extended to AIG, said: "I've asked Secretary Geithner to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole."

 

Massive losses at a London trading division have already forced the US government to pump some 150 billion dollars into AIG, leaving the company 80 percent owned by the taxpayer.

 

On March 2, the administration unveiled another emergency injection of 30 billion dollars.

 

According to widespread reports, the bonuses are largely going to traders at the very London-based financial products unit that is blamed for AIG's spectacular fall from grace.

 

White House spokesman Robert Gibbs said the administration was looking to attach stricter conditions to the latest infusion of 30 billion dollars.

 

"Certainly, any person that is subject to these bonuses ... should think long and hard about whether, given the performance of the company, this is either warranted or appropriate," he told reporters.

 

Acknowledging the public's anger at how 700 billion dollars in government bailout money for Wall Street has been used, Gibbs said the AIG case "offends our common sense, offends our sense of value, and seems completely misplaced."

 

The administration is at risk of deeper public anger after AIG revealed on Sunday that it had passed on 22.4 billion dollars of government money to many foreign-owned banks that signed up for its exotic insurance against risky bets.

 

France's Societe Generale and Germany's Deutsche Bank were among the top three recipients after AIG used the bailout funds to cover so-called credit default swaps offered by the London office.

 

AIG was deemed by the US government to be too big to fail, given the intricate web of ties it built with other financial institutions through the credit default swaps linked to the tanking property market.

 

Obama said he wanted Congress to pass tougher financial regulation "so we don't find ourselves in this position again."

 

In a letter to Geithner Saturday, government-appointed AIG boss Edward Liddy said the bonuses could not be canceled due to the threat of lawsuits for breach of employment contracts.

 

He also argued that AIG risked an exodus of senior employees unless it awarded incentives to retain "the best and the brightest talent."

 

That argument is being ridiculed in Congress as the Obama administration girds for the tough sell of asking for more bailout money to help US banks clear out their toxic assets.

 

John Boehner, the Republican leader in the House of Representatives, said the "outrageous" AIG bonuses proved his party's case that Obama must spell out an "exit plan" to wind down his administration's hefty market interventions.

 

 

 

Good money indeed! I agree all these people should be fired instead!

[Application9999]

my hero.... ....he is one that dare to go head on with those so called elite group.....

[Stary]

my hero.... ....he is one that dare to go head on with those so called elite group.....

 

 

But I don't think he can change much.

 

 

[Pcslim]

He also argued that AIG risked an exodus of senior employees unless it awarded incentives to retain "the best and the brightest talent."

Greatest joke. AIG is in this position today because of these so-called "best and brightest talent" it has.

[Shull]

Greatest joke. AIG is in this position today because of these so-called "best and brightest talent" it has.

 

am i seeing some parallelism between them and *ahem..sick* and *gee, wanna die*

[Sabian]

ask obama to stop talking kok lah...

 

after the ML bonus saga, still have this kind of thing happen, as if the T©ARP Fund oversight committee did not know that AIG was gg to pay the bonuses.

 

If no implicit approval, the AIG CEO dare to stick his neck out and pay out bonus using public funds in this kind of ecomonic mood?

 

BO is just a puppet installed by puppeteers behind the scenes. He is beholden to them to make sure no fat cats get hurt. The regulators are alumni of the Wall St banks or good pals, such cosy relationship.

 

now use public money to mop the floor.

[Sony]

my hero.... ....he is one that dare to go head on with those so called elite group.....

 

 

talk only.. wait till we see the action.. but frankly.. i see him talk .. just like a few weeks back.. he said he's outraged.. so now, again? it's starting to rub off some people..

[Alcapone]

AIG is almost bankrupt, and the government bailout funds is to help the company survive not to pay bonuses to workers.

[Stary]

talk only.. wait till we see the action.. but frankly.. i see him talk .. just like a few weeks back.. he said he's outraged.. so now, again? it's starting to rub off some people..

 

 

he is outraged because these AIG dudes get millions and he only get 400K and he can't do anything about it.

 

 

[Babyt]

How come a coy on the verge of bankrupcy needs to give bonus when it is not even profitable?

 

Why is there a need to give bonus to retain staff? not as if the staff can go anywhere else in this recession. They sld be happy they get to keep their job.

 

 

 

[Sony]

he is outraged because these AIG dudes get millions and he only get 400K and he can't do anything about it.

 

 

oh well.. tell him that after his term, when he give talks, he will be earning millions as well.. don't worry

[Drive_carcar]

What puzzles me is how can bonuses ever be legally enforceable? It's pure bovine excrement.

[Stary]

How come a coy on the verge of bankrupcy needs to give bonus when it is not even profitable?

 

Why is there a need to give bonus to retain staff? not as if the staff can go anywhere else in this recession. They sld be happy they get to keep their job.

 

The American mindset especially those in the financial circles is not something we can understand.

 

"Sharing the pain" is something Asian. You tell Americans that if company don't do well and everyone should "share the pain", they will laugh at you.

 

 

[Acemundo]

haven't u heard of the american dream?

 

it seems like it is a country of dreamers. they dream of big salaries, dream holidays, big yachts and private jets.

[Darryl]

Interestingly, some American companies in Singapore operate in the same manner, their staff has fixed 'bonus' like 2 mths or 2.5 mths in the employment contract.... According to my friends, it is like part of their 'pay package'.

[Yuan]

ask obama to stop talking kok lah...

 

after the ML bonus saga, still have this kind of thing happen, as if the T

[Kezg1]

 

 

 

I am no genius in the financial world but I can say if the US gahman let AIG go DOWN......buy up the whole company...reshuffle the management.......it will be definitely less than 170b....and they are in full control

[Stary]

I am no genius in the financial world but I can say if the US gahman let AIG go DOWN......buy up the whole company...reshuffle the management.......it will be definitely less than 170b....and they are in full control

 

Yes...but the problem is that if they do that, they worry it will cause a chain of collapse due to loss of confidence and whatever nots.

 

In anycase, the government wouldn't want to nationalise any big institutions if they can help it.