Obama directs Geithner to block AIG bonuses

President Obama Monday blasted the $165 million in new bonus pay American International Group just paid to executives as an “outrage” that betrays the “fundamental values” of American taxpayers.

Mr. Obama said given the “substantial sums” AIG has received in government bailout money — upwards of $85 billion — he has directed Treasury Secretary Tim Geithner to use the funds as “leverage” and pursue “every single legal avenue” to block the bonuses.

Mr. Obama said AIG’s woes are “due to recklessness and greed.”

“Under these circumstances, its hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million dollars in extra pay,” he said. “I mean how do they justify this outrage to the taxpayers who are keeping the company afloat?”

Mr. Obama said Mr. Geithner is “on the case” and when he needed to clear his throat during his remarks he quipped, “Excuse me, I’m choked up with anger here.”

The president made his comments with Mr. Geithner at his side during an event with community lenders and small businesses in the White House’s East Room.

The event was to announce the Obama administration is temporarily eliminating fees for small business lenders to get credit flowing.

Mr. Obama and Mr. Geithner said the government this month will make direct purchases of securities backed by small business loans and will buy new securities so community banks and credit unions will offer new loans.

They also will offer higher loan guarantees and reduced fees with the goal to boost confidence and getting more loans out the door quickly.

The White House noted small businesses have created 70 percent of the new jobs over the past decade, and said the U.S. Small Business Administration is reporting the year is on track for less than $10 billion in new lending, half the typical annual loans of $20 billion.

Mr. Geithner was applauded for announcing the IRS will allow small businesses to carry operating losses for five instead of the usual two years.

“Small business are the engine of America’s dynamism,” Mr. Geithner said. “When you prosper the nation prospers.”

He said small businesses can help lead the country out of the recession.

Mr. Geithner also offered what he said should be a “clear message” to the nation’s banks, saying their role in the financial crisis means, “you bear a special responsibility for helping America get out of it,” he said.

Story Continues →