'OUTRAGE' AT AIG BONUS PAYMENTS!

AIG insures financial institutions around the world

The Obama administration and US senators have reacted angrily to the bonus payouts to executives announced on Sunday by US insurance giant AIG.

President Barack Obama's economic adviser Larry Summers said the recent goings on at AIG were "outrageous".

But he conceded that legal obligations meant the company had no choice but to pay the $165m (£116m) in bonuses.

House Financial Services Committee chairman Barney Frank said the bonuses were "rewarding incompetence".

"These people may have a right to their bonuses. They don't have a right to their jobs forever," he said.

AIG has received bailouts from the US government totalling $180bn (£127bn) since coming close to collapse in 2008.

"There are a lot of terrible things that have happened in the last 18 months, but what's happened at AIG is the most outrageous", said Mr Summers.

But he admitted that, despite the strength of feeling in the White House, there was little the administration could do to stop the bonus payments.

AIG: QUICK FACTS 30 million US policy holders Operates in 130 countries Provides insurance to 100,000 companies and other entities

"The easy thing would be to just say... off with their heads, violate the contracts. But we are a country of law. The government cannot just abrogate contracts," he said.

Mr Summers said that Treasury Secretary Timothy Geithner had used all his power, both "legal and moral", to lower the payments.

"I don't know why they [AIG] would follow a policy that's not really sensible, is going to ignite the ire of millions of people, and we've done exactly what we can to prevent this kind of thing happening again," said Austan Goolsbee from President Obama's Economic Recovery Advisory Board.

Indeed bonuses for 2009 are to be cut sharply - by up to 30% according to AIG boss Ed Liddy - but those agreed for 2008 will be paid.

Such concessions did little to appease angry senators.

"Did they enter into these contracts knowing full well that, as a practical matter, the taxpayers of the United States were going to be reimbursing their employees?

"Particularly employees who got them into this mess in the first place? I think it's an outrage," said Senate Republican leader Mitch McConnell.

Democrat Elijah Cummings was equally incensed: "It's like, OK, you got to help me screw you. And by the way I'm going to take your money and I'm going to slap you with it."
BBC NEWS REPORT.