- The Washington Times - Wednesday, March 18, 2009

WASHINGTON (AP) - President Barack Obama declared Wednesday, “The buck stops with me,” as the misuse of bailout money threatened to overshadow his efforts to assuage economically hard-hit Californians.

Obama’s first appearance as president in a state he won convincingly last year was designed to highlight the job-creating benefits of the $787 billion economic stimulus plan he pushed through Congress last month. Recession, a housing meltdown and double-digit unemployment have taken a toll in California.

Obama scheduled town-hall meetings in Orange County on Wednesday and in downtown Los Angeles on Thursday.

But the public outrage over AIG’s payment of $165 million in executive bonuses while receiving billions in taxpayer bailout money threatened to swamp his message. Voters at the town-hall meeting at the Orange County Fair and Event Center will have their first chance to question the president since the furor over the bonuses erupted Sunday.

Before leaving Washington, Obama told reporters that no one in his administration created the AIG mess but took responsibility to fix it and “make sure that we never put ourselves in this kind of position again.”

He said he and his economic team have begun talks with Congress to speed legislation giving Treasury the power to govern large financial institutions such as AIG, which if merely liquidated could reverberate disastrously throughout the financial system.

Under the new so-called “resolution authority,” the Treasury secretary, after consulting with officials at the Federal Reserve, would be able to run a major financial institution in a type of conservatorship, said an administration official, speaking on condition of anonymity because the plan has not yet been released.

The arrangement would be similar to what the Bush administration did when it seized control last September of mortgage giants Fannie Mae and Freddie Mac.

The government had the power to take control of those companies because of their status as government-sponsored enterprises. However, the government did not have such powers when it came to AIG. Because it was deemed that allowing AIG to declare bankruptcy would have been too destabilizing to the financial system, Washington has been forced to pump $170 billion of taxpayer money into the company to keep it afloat.

“Nobody here drafted those contracts (providing for the bonuses),” Obama said. “Nobody here was responsible for supervising AIG and allowing themselves to put the economy at risk by some of the outrageous behavior that they were engaged in. We are responsible, though. The buck stops with me.”

On Thursday, Obama also will appear on comedian Jay Leno’s late-night show on NBC. It’s a rare _ some say unprecedented _ move for an incumbent president, and it carries opportunities as well as risks.

The program reaches millions of viewers who might care little for newscasts. And Leno is unlikely to grill Obama as intensely as reporters would on, say, “Meet the Press.”

But with many Americans deeply anxious about the economy and angry over the AIG bonuses, Obama might be seen as frivolous or unpresidential if the banter seems mocking or dismissive.

White House press secretary Robert Gibbs made Leno’s format sound more like a college symposium than a well-known source of sharp one-liners and quips about celebrities and politicians.

“I anticipate that a large amount of the discussion will center around the president’s economic plans and the president’s economic ideas,” Gibbs told reporters Tuesday.

___

AP Economics Writer Martin Crutsinger contributed to this report.

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