American International Group, the insurer that has received more than $170 billion in taxpayer bailout money from the U.S. Treasury and Federal Reserve, plans to pay about $165 million in bonuses to executives in the same business unit that brought the company to the brink of collapse last year.
Word of the bonuses last week stirred such deep consternation inside the administration of President Barack Obama that Treasury Secretary Timothy F. Geithner told the firm they were unacceptable and demanded they be renegotiated, a senior administration official said. But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them.
Lawrence H. Summers, director of the National Economic Council, on Sunday called the A.I.G. bonuses “outrageous.” Having said that, he quickly added on the ABC “This Week with George Stephanopoulos” program: “The government cannot just abrogate contracts. Every legal step possible to limit those bonuses is being taken by Secretary Geithner and by the Federal Reserve system.”
Another top White House economic adviser, Austan D. Goolsbee, described a seemingly visceral reaction by Mr. Geithner to word of the bonuses. “He was really upset by the news. He stepped in and berated them, got them to reduce the bonuses.” Mr. Goolsbee, speaking on “Fox News Sunday,” added: “I don’t know why they would follow a policy that’s really not sensible, that’s obviously going to ignite the ire of millions of people.”