17 Mar 2009

Obama wants AIG bonus payments blocked

3:05 pm on 17 March 2009

President Barack Obama has ordered his treasury secretary to take legal measures to block large bonus payments awarded to top employees of insurer AIG.

The insurance giant is being kept alive by taxpayer dollars, having received a government bailout of up to $US180 billion, and is now paying $US165 million in bonuses.

"This is a corporation that finds itself in financial distress due to recklessness and greed," Mr Obama said.

"Under these circumstances, it's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay," he said in remarks at the White House.

The president said he had asked Treasury Secretary Timothy Geithner to pursue "every single legal avenue" to cancel the bonuses.

The company's new chief executive, Edward Liddy, has said the insurer was legally obliged to fulfill 2008 employee retention payments but had agreed to revamp its system for future bonuses.