Priority number one for the White House, reports CBS News senior White House correspondent Bill Plante, is separating the President's economic plan from the bonus debacle.
President Obama and his top aides expressed outrage at reports that AIG went ahead with $165 million in bonuses even though the company received more than $170 billion in federal rescue money. Mr. Obama directed Treasury Secretary Timothy Geithner to see whether there was any way to retrieve or stop the bonus money - a move designed as much for public relations as for public policy.
"I mean, how do they justify this outrage to the taxpayers who are keeping the company afloat?" Mr. Obama said Monday in announcing a plan to help small businesses.
New York Attorney General Andrew Cuomo said Monday he would for details of the bonus payments and investigate whether any of those who got them were responsible for the company's failure.
Plante reports that Republican lawmakers expressed some outrage of their own.
"Where was the Secretary of the Treasury? Where was Treasury before this money was paid out," Alabama Sen. Richard Shelby asked Tuesday on The Early Show.
"It's a lot of money, $165 million, and a lot more is supposed to be paid out in the future. Why did Treasury not step in and let the American people know - try to block it," he asked rhetorically. "I don't know what President Obama knew about it. I'd say he probably didn't know about it. Timothy Geithner is the Secretary of the Treasury. He either knew or should have known about what was going on. Treasury's deeply involved in this bailout."
Iowa Sen. Chuck Grassley, in a radio interview, suggested that AIG executives follow what he called the Japanese example: "Come before the American people and take that deep bow and say I'm sorry and then either do one of two things; resign or go commit suicide."
Lawmakers will get a chance to question AIG's chairman, Edward Liddy, about this when he testifies Wednesday on Capitol Hill, adds Plante.
But, as CBS News chief legal analyst Andrew Cohen points out, there may not be much the government can do to stop the bonus payments.
"In a normal situation, a creditor (like the United States) might be able to run into court and argue that its debtor, AIG, is about to siphon off preferential money in advance of a bankruptcy.
"But of course the United States cannot argue that AIG is heading into bankruptcy at the same time our government agents are working so hard to convince everyone that the giant company has been sufficiently buttressed," Cohen writes.
The financial bailout program remains politically unpopular and has been a drag on Mr. Obama's new presidency, even though the plan began under his predecessor, President George W. Bush.
The White House is aware of the nation's bailout fatigue; hundreds of billions of taxpayer dollars have gone to prop up financial institutions that made poor decisions, while many others who have done no wrong have paid the price.
News that AIG still needs billions in taxpayer dollars to prevent a collapse did little to build public confidence, Obama aides acknowledged. Seeking to turn the public tide, White House spokesman Robert Gibbs aggressively criticized AIG and said administration officials were working to put strict limits on the next $30 billion installment bound for the company.
"Treasury has instruments that can address the excessive retention bonuses, and add provisions to ensure that taxpayers are made whole," Gibbs said.
Two months into office and despite the numerous economic challenges facing the country, President Obama's job approval rating is 62 percent, according to a CBS News poll released Tuesday.
The AIG news overshadowed what Mr. Obama's aides had hoped to spend the first part of the week discussing: billions of dollars to in the hopes of getting credit flowing again. Mr. Obama heaped praise on the little guys of American industry, often overshadowed in the blitz of government bailouts.
Mr. Obama's latest plan allows the government to spend up to $15 billion to buy the small-business loans that are now choking community banks and lenders. That, in turn, could allow those banks to start lending money again to small companies to invest, pay bills and stay afloat.
"You deserve a chance. America needs you to have a chance," Mr. Obama said in an appeal to all those who run small businesses or hope to one day.
On Capitol Hill, House Republican leader John Boehner was unmoved. He called Mr. Obama's White House event "simply an attempt to provide political cover for the job-killing burden the president's budget would place on our nation's small businesses." The House Republican whip, Eric Cantor of Virginia, said Mr. Obama's plan was welcome, but he predicted it would affect only a small portion of the loan market for small businesses, leaving others and their workers "in the cold."