Obama May Restrict AIG Bailout Money

Amid Outrage From Politicians, Public, Administration Looks To Rein In Insurance Giant's Spending

(CBS/AP)  The White House says it's looking at restrictions on some $30 billion in taxpayers' money approved to help American International Group as the administration tries to reclaim or block millions of dollars in bonuses the struggling company awarded executives.

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 subpoena AIG 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 help the nation's small businesses 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."

[tiredofitall]

Statement Information for April 2009 Account Number: 03xxxxxxxxxxx - 70
Payment Due Date: 04/05/2009


Loan Type Loan Number Interest Rate1 Principal Balance Payoff Balance2 Payment Received
(Principal + Interest + Late Fees3) Amount Due
Federal Unsubsidized Stafford 21 6.800% $4,634.00 $5,378.69 $744.69

Federal Unsubsidized Stafford 23 6.800% $5,000.00 $5,592.75 $592.75

Federal Unsubsidized Stafford 25 6.800% $5,000.00 $5,375.88 $375.88

Federal Unsubsidized Stafford 28 6.800% $3,334.00 $3,461.76 $127.77

Totals $45,320.00 $0.00 $0.00 $0.00 $1,841.09

Total Payment Received: $0.00
Minimum Payment Due2: $1,841.09
Payment Due Date: 04/05/2009

My student loans just went into repayment and Citbank (one of the banks that received bailout money) wants $1,841.09. I called a rep today and was told to "deal with it!" or they will garnish my wages. Why didn't the government tell the banks and these companies the same thing that I was told today. " Just Deal With It!"

[marcosol7]

I believe that President is irresponsible in dealing with AIG. Saying "blame it on me", means that he wants us to move on. I believe that President Obama has enough power to get 165 million dollars back to us the taxpayers. It is a shame that he is not doing anything about, except saying "blame it on me". I feel betrayed.

[noloyalisti]

How about a firing squad for the AIG executives, that would solve the bonus problem? And it would be a warning to the other rich folk to start looking at where they got their money.

[sherrylck]

well, as i see it, they were greedy, and wanted their money, doesnt matter if the rest of america is going to suffer as long as they get their money. how to help? DONT give them any more of our money. if you feel like giving money away, give it to the american people not this big companies that SHOULD know how to run a business. and not into the ground. If Mr Obama wants to feel free with our ameican monies, give it to the people who will make the bets use of it the american public. They sure as heck dont build rockets there so why the heck do they need such huge bonuses? IF they were good enough to run a company, they wouldnt need a bail out. DONT KEEP GIVING TO THE SOB'S.

[fzy1hc]

Gee people that left AIG are still getting a bonus check!!

Here they didn't earn the money and the company was looking for help.

We the people own the company we should have a say.

Senators and Congressman we put you in office start doing your JOB!!

[dreamland4ever]

wow good idea. Payback or everyone close accounts don't do business with the sleaze bags.Forced bankruptcy. Power to the people.

[123pinball]

SCREW AIG!!!!! Let them fail. Global market meltdown?? Who is putting this BS for all the blind sheep to follow? Wake up people. The ****** keep getting all the cash and you keep getting what comes out the other end.

[WereNotGonnaTakeIT]

Obama May Restrict AIG Bailout Money

-Does this include the campaign money that he and Chris Dodd received from AIG, with Dodd beign the highest recipient and he the 2nd?

[zipadeedodah]

I closed my accounts with AIG. To hell with them.....

[adias2]

Ah?I understand there is outrage sweeping the country because AIG paid bonuses to its employees. A wise man once said when you see a fire, first step back to see where it came from and where it is heading, then you may fight the fire. Let?s investigate where this fire is coming.

When you step back, you realize it is coming from the Offended Ones. The Offended Ones include President Obama and his leaders in Congress including Madame Pelosi, Mr. Harry Reid, Mr. Barny Frank, Mr. Chris Dodd, and the ever eloquent MS. Diane Feinstein. The Offended Ones go to their underlings, the media, to claim how offended they are that AIG is paying bonuses to their employees. The underlings do good job sending message out far and wide.

Ahso!

Why you ask are the Offended Ones so upset?
Y
ou know that Offended Ones with all of Democratic Congress (NO republicans from the house and only 3 Republicans from the senate) voted for famous $787 billion stimulus bill.

You may not know that $787 spending bill contained provision inserted by Senator Chris Dodd (D) that allowed bonuses to be paid by companies who received bailout funds provided that these bonuses were pursuant to a written employment agreement. Senator Dodd was happy to insert provision for AIG. The entire group of Offended Ones voted for the stimulus bill with this provision in it. The Federal Reserve had already specifically approved these payments by AIG.

I am not upset with AIG. I am upset with Members of Congress who vote for bills before reading them. I am upset with Members of Congress who change minds faster than the earth can seasons. I am upset with Members of Congress who beat their chest warning of drastic measures. I am upset with Congress threatening to create special tax on AIG employees which would take their entire bonus after they already earned it.

A wise man once said a man of honor says what he means and means what he says. I think this explains all problems in Congress.

PS Who has directions to the Tea Party?