Mar 17, 2009 6:16 am US/Eastern
President Obama Blasts AIG Over Bonuses
Says "Recklessness" And "Greed" Have Destroyed The Insurance Giant; N.Y. AG Cuomo Subpoenas List
By ALEXIS CHRISTOFOROUS, CBS 2 HD News
NEW YORK (CBS) ―
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Buildings are reflected in the window of a van outside the offices of troubled insurer American International Group in New York on Sept. 17, 2008.
Stan Honda/AFP/Getty Images
A bonus battle is brewing over the millions paid to AIG employees. The feds have given the insurance giant $170 billion in bailout money.
Now, President Barack Obama is expressing outrage. He wants the insurance giant to stop paying out millions in bonuses.
"This is a corporation that finds itself in financial distress due to recklessness and greed," Obama said.
The struggling company has received more than $170 billion from the federal government in the past six months. Reports have surfaced that AIG used some of the money to give substantial bonuses to traders -- some of whom contributed to the company's near collapse.
"It's hard to understand how derivative traders under AIG warranted any bonuses, much less $165 million in extra pay."
President Obama has asked Treasury Secretary Timothy Geithner to use all legal means to block the bonuses or recover money already paid.
New York Attorney General Andrew Cuomo is also stepping in to stop the bonuses. He wrote a letter to the head of AIG demanding the names of those receiving bonuses. He has not yet received that information and issued subpoenas late Monday afternoon.
AIG's chief said he was under contractual obligations to award the bonuses.
That has taxpayers steaming mad.
"It's really disheartening when people are losing their jobs and their homes and being turned out on the street," said Lynn Kay of South Carolina.
"Oh man, it's ridiculous. It's absolutely crazy," said Stewart Marland of New York City.
President Obama said Americans are working hard to meet their responsibilities and from Main Street to Wall Street taxpayers just want everyone to play by the same rules.
Attorney General Cuomo doesn't just want a list of the bonus recipients at AIG. He is also demanding to see their employee contracts. He noted that if the government hadn't saved AIG, the bonus contracts would have been void and, he added, contracts can be re-negotiated.
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