Obama: Can not Justify Aig "Outrage" Premium Exec
WASHINGTON – The President Barack Obama said Monday that insurance giant American International Group was in financial trouble because of "carelessness and greed "and said he intends to keep it from paying out millions in bonuses direction.
"It is difficult to understand how derivatives traders at AIG bonuses justified, let alone $ 165 million of additional compensation, Obama said at the beginning of an appearance to announce support for small businesses affected by the recession.
"How can they justify this insult to taxpayers keep the company afloat, "the president.
Obama spoke in the wake of reports that have appeared over the weekend saying that the funds were empty American International Group Inc. was paying substantial bonuses to executives.
Noting that AIG has "received substantial" aid by the federal government, Obama said he has asked Treasury Secretary Timothy Geithner "to use this leverage and seek all legal means to block these premiums and to all American taxpayers. "
Said Obama: "Nationwide, there are People who work hard and take their responsibilities every day, without benefit of government bailout plans or bonuses of several million dollars. And they ask is that everyone, from Main Street to Wall Street to Washington, play by the same rules. "
"This is not just about dollars and cents, "he added." These are our core values. "
165 million was payable to officers by Sunday and was part of a larger total payout would be worth 450 million dollars. The company has received over $ 170 billion federal rescue.
AIG reported this month that it had lost $ 61.7 billion for the fourth quarter of the year Last, the largest corporate loss in history. Most of the payments in question include AIG Financial Products unit of society who sold credit default swaps, contracts to risk causing massive losses for the insurer.
Rep Barney Frank, Chairman House Financial Services Committee, charged earlier Monday that the move to pay high premiums to "rewarding incompetence."
"These people may be entitled to their bonuses. They have no right to their jobs forever, "said Frank, a Democrat Massachusetts.
Frank noted that the Federal Reserve Board, using a law Depression, was the institution that gave its AIG bailout Initial government, before Congress passed a law providing additional support and stated that no adequate safeguards have been constructed in the face.
It was also revealed this weekend that American International Group Inc. used more than $ 90 billion in aid Federal pay foreign and domestic banks, some of which have received their own multibillion dollar rescue of U.S. government.
Some of the biggest recipients of money from AIG was Goldman Sachs with 12.9 billion, and three European banks – France Company General $ 11.9 billion, Germany Deutsche Bank in $ 11.8 billion, and Barclays PLC, Britain at 8.5 billion dollars. Merrill Lynch, who is also subject to federal review of his bonus plans, has received 6.8 million billion at December 31.
Money went to banks to cover their losses on complex mortgage investments, as well as the guarantees necessary for other transactions.
"We must explore all we can for the government to ensure that this money is not wasted," said Senator Richard Shelby, R-Ala. "These people have brought this on themselves. Now, you are rewarding failure. Many of these people must be fired, not rewarded with bonuses. It's horrible. It is scandalous. "
Frank said he was disgusted, saying that "these awards are for people who screwed this thing a lot. "
"It may be time to draw some people he said. "We can not prevent their bonus but we can not keep them from seeing their jobs. … In high school, they would not get retention (premiums), they would have obtained possession. "
AIG has agreed to government demands for Obama withhold future payments. Geithner had pressed the case of the President with the Chairman of AIG, Edward Liddy last week.
"He stepped in and reprimanded, to have reduce premiums following all legal means to do it, "Austan Goolsbee said, personnel director of President Barack Obama's Economic Recovery Advisory Council.
Obama noted in his speech Monday that Liddy "came on board after the contracts that have led these premiums were agr3eed last year. "
In an interview that aired Sunday on CBS "60 Minutes" Federal Reserve Chairman Ben Bernanke did not address the bonuses, but expressed his frustration with AIG intervention.
"It makes me angry. I slammed the phone more than a few times to discuss AIG, "Bernanke said." It is – it's just absolutely – I understand why the American people are angry. "
In a letter dated Saturday Geithner, Liddy said outside lawyers had informed the company that AIG had contractual obligations to ensure bonus payments and could face prosecution if it does not. ( http://104Inc.com )
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