President Obama & NY Attorney General Cuomo Outraged by AIG

"This is a corporation that finds itself in financial distress due to recklessness and greed," Mr. Obama said.

"Under these circumstances, it's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay," he said at the White House.

"How do they justify this outrage to the taxpayers who are keeping the company afloat?"

President Obama said he had ordered Treasury Secretary Timothy Geithner to pursue "every single legal avenue" to cancel the bonuses and a Treasury official said later it would modify a planned $30 billion capital infusion for American International Group to try to recoup the bonuses.

Mr. Cuomo’s letter, demanding the information by 4 p.m. on Monday under threat of subpoena, is the latest instance of outrage by a public official regarding the plan. At a speech before small business owners Monday afternoon, President Obama said he is asking the Treasury Department to pursue “every single legal avenue to block” the bonuses.

New York Attorney General Andrew Cuomo said he will subpoena American International Group Inc., the insurer that got a $173 billion taxpayer bailout, for information on employees who he said were sent bonuses March 13.

Wrote Cuomo: We need this information immediately in order to investigate and determine: (l) whether any of the individuals receiving such payments were involved in the conduct that led to AIG’s demise and subsequent bailout; (2) whether, as you claim, such individuals are truly required to unwind AIG Financial Product’s positions; (3) whether such contracts may be unenforceable for fraud or other reasons; and (4) whether any of the retention payments may be considered fraudulent conveyances under New York law.

In the Wall Street Journal (in December 2008), citing a confidential document and people familiar with the matter, which estimated that about $19 billion of the payouts went to two dozen counter-parties between the government bailout of AIG in mid-September and early November 2008. According to this Wall Street Journal report, nearly three-quarters was reported to have gone to a group of banks, including Société Générale SA ($4.8 billion), Goldman Sachs Group ($2.9 billion), Deutsche Bank AG ($2.9 billion), Credit Agricole SA’s Calyon investment-banking unit ($1.8 billion), and Merrill Lynch & Co. ($1.3 billion).

Some banks that were also paid by AIG after it was bailed out by the government

Goldman Sachs Deutsche Bank Merrill Lynch Société Générale Calyon Barclays Rabobank Danske HSBC Royal Bank of Scotland, Banco Santander, Morgan Stanley, Wachovia, Bank of America, Lloyds Banking Group Source: WSJ research.

The beneficiaries of the government's bailout of American International Group Inc. include at least two dozen U.S. and foreign financial institutions that have been paid roughly $50 billion since the Federal Reserve first extended aid to the insurance giant.

Among those institutions are Goldman Sachs Group Inc. and Germany's Deutsche Bank AG, each of which received roughly $6 billion in payments between mid-September and December 2008, according to a confidential document and people familiar with the matter.