Obama Seeks To Block AIG Bonus Payments

NPR.org, March 16, 2009 · President Obama said Monday he has asked the Treasury Department to try to block $165 million in bonuses that insurer AIG plans to award to its staff, despite getting a bailout from the government to pay creditors.

Obama said he has directed Treasury Secretary Timothy Geithner to use the government’s leverage as a lender and partial owner of AIG — and all legal measures — to try to block the payout of the money. Earlier this month, AIG reported that it lost $61.7 billion in the fourth quarter of 2008, the largest corporate loss in history.

“This is a corporation that finds itself in financial distress due to recklessness and greed,” Obama said at the White House. “Under the circumstances, it’s hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay.”

The government has given at least $170 billion to AIG since last fall; taxpayers now own nearly 80 percent of the company.

“I’ve asked Secretary Geithner to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole,” the president said.

Obama made the comments at the beginning of a news conference to announce a program to get credit flowing to small businesses. Speaking to business owners, the president said the Small Business Association would boost the amount of money it guarantees on loans to small businesses to 90 percent — a move intended to spur bank loans.

The administration also announced that the 21 largest banks that are receiving government money must report how much money they are lending to small businesses on a monthly basis.

Obama said extending loans to small businesses will stimulate growth and put Americans back to work. Last month, the nation’s unemployment rose from 7.6 percent to 8.1 percent.