- The Washington Times - Monday, March 16, 2009

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.

He said credit is “essential to economic recovery” and, “We need our nation’s banks to go the extra mile” especially since the government has afforded “extraordinary protections” to them this year.

“We need you to put that assistance to work,” he said. “The risk now to the economy is that you will take too little risk.”

At the event, the president also called for stricter reform and said his White House will work with Congress on new legislation.

“What this situation also underscores is the need for overall financial regulatory reform, so we dont find ourselves in this position again, and for some form of resolution mechanism in dealing with troubled financial institutions, so we have greater authority to protect American taxpayers and our financial system in cases such as this,” he said.

The president said Mr. Geithner is working with AIG’s new CEO Edward Liddy, put in place after the bonuses were agreed to.

“This isnt just a matter of dollars and cents. Its about our fundamental values,” he said. “All across the country, there are people who work hard and meet their responsibilities every day, without the benefit of government bailouts or multi-million dollar bonuses.… And all they ask is that everyone, from Main Street to Wall Street to Washington, play by the same rules.”

Also Monday, liberal activist group MoveOn.org asked its millions of members to petition Mr. Geithner and Congress saying taxpayers should get their money back.

“Under no circumstances should the AIG executives who helped create the financial crisis receive bonuses,” reads the petition. “That’s our money and you should do whatever it takes to get it back.”

The MoveOn email said that were it not for the bailout, “AIG would be bankrupt and these folks would already have been laid off.”

Members of Congress sounded off on the issue over the weekend and are pursuing legislative options.

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