Obama 'outrage' over €127m bonus for AIG bosses
President Barack Obama hit out at the “outrage” of executives at struggling insurance giant AIG receiving millions of dollars in bonuses.
In an angry statement, Mr Obama said the company’s financial problems were the result of “recklessness and greed”. As such it was hard to justify $165m (€127m) in extra pay to executives, he said.
AIG has received more than $170bn (€130bn) in bailout cash from the government. The insurer is now 80%-owned by the state as a result of attempts to prop up the struggling firm.
The government stepped in amid concern that if allowed to fail, AIG’s collapse would have far-reaching consequences, deepening the global recession.
Since being installed as president, Mr Obama has stressed the importance of firms being made to be accountable over money they receive from taxpayers.
It followed growing concern over the use of the first tranche of bailout cash, and public disgust over bonuses and other executive perks such as private jets.
The bonuses that sparked Mr Obama’s comments relate to money to be handed out to around 400 employees of AIG Financial Products.
The extra cash was agreed last year before AIG went cap in hand to the government. The 165 million dollars due to be paid out this week is part of a larger payout of around $450m (€346m).
Mr Obama indicated that his administration was working with new AIG chief executive Edward Liddy to address the issue.
He said: “This is a corporation that finds itself in financial distress due to recklessness and greed.
“Under these circumstances, it is hard to understand how derivative traders at AIG warranted any bonuses, much less 165 million dollars in extra pay. How do they justify this outrage to the taxpayers who are keeping the company afloat?”
He continued: “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. This is an ethic we must demand.”
Mr Obama added: “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.”
AIG spokeswoman Christina Pretto said: “We are in contact with the attorney general and will of course respond to his request.”
