President Obama to Bailed-Out AIG: I Will Pursue 'Every Single Legal Avenue to Block These Bonuses'

The insurance giant's $450 million in bonuses are becoming a political lightning rod.

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By Helen Kennedy
DAILY NEWS STAFF WRITER

Bonus-hungry AIG execs came under withering fire from all sides Monday as President Obama vowed to stop their payouts and New York Attorney General Andrew Cuomo demanded to know who got what and why.

Cuomo gave the company until 4 p.m. to cough up a list - or face subpoenas.

"Covering up the details of these payments breeds further cynicism and distrust in our already shaken financial system," Cuomo wrote in a letter to AIG CEO Edward Liddy.

Cuomo demanded a list of all executives at AIG Financial Products getting bonuses; a description of each individual's job description and performance; copies of whatever contracts AIG says obligates them to make the payments; and a list of who negotiated the contracts.

"We owe it to the taxpayers to take every possible action to stop unwarranted bonus payments to those who caused the AIG meltdown in the first place."

Meanwhile in Washington, President Obama joined the chorus of outrage at AIG - which taxpayers have bailed out to the tune of $170 billion - for promising $450 million in bonuses to the same division that brought the company down.

"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," Obama told reporters.

"How do they justify this outrage?"

Obama said he asked Treasury Secretary Tim Geithner to "pursue every single legal avenue to block these bonuses."

AIG says it is obligated to pay out the money, originally designed to keep talent from jumping ship, because the contracts were signed before the bottom fell out.

Critics said the executives at AIG's Financial Products unit, who were clearly not all that talented because it was their reckless bets that kneecapped the firm, would be getting zero if the taxpayers had let AIG die.

"AIG's arguments are absurd on their face," former Clinton administration Labor Secretary Robert Reich said on his blog.

"Had AIG gone into chapter 11 bankruptcy or been liquidated, as it would have without government aid, no bonuses would ever be paid; indeed, AIG's executives would have long ago been on the street."