PRESIDENT BARACK OBAMA VOWS TO BLOCK AIG BONUSES

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President Obama orders Treasury secretary to work to block AIG bonuses. The President expressed his outrage over the more than $165 million dollars in bonuses which were given out by AIG to their corporated executives after taxpayers bailed them out.

President Barack Obama says his administration will "pursue every legal avenue" to stop insurance giant American International Group from paying $165 million in executive bonuses. Obama made the declaration at the outset of an appearance at the White House to announce new steps to ease loans for small businesses hurt by the economic crisis. Obama said he has asked Treasury Secretary Timothy Geithner (GYT'-nur) to use the leverage of government assistance to AIG to get the company to roll back the bonuses. He said the company cannot justify "this outrage to the taxpayers" who are keeping it afloat. THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below. WASHINGTON (AP) — Rep. Barney Frank charged Monday that a decision by financially strapped insurance giant AIG to pay millions in executive bonuses amounts to "rewarding incompetence." Echoing outrage expressed on both sides of the political aisle in the wake of revelations that American International Group will pay roughly $165 million in bonuses, Frank said he believes it's time to shake up the company. "These people may have a right to their bonuses. They don't have a right to their jobs forever," said Frank, a Massachusetts Democrat who is chairman of the House Financial Services Committee. Appearing on NBC's "Today" show, Frank noted that the Federal Reserve Board, using a Depression-era statute, was the institution that gave AIG its initial government bailout, before Congress passed legislation providing for additional assistance. He said he did not think sufficient safeguards were built into that initial bailout by the Fed. The $165 million was payable to executives by Sunday and was part of a larger total payout reportedly valued at $450 million. The company has benefited from more than $170 billion in a federal rescue. AIG reported this month that it had lost $61.7 billion for the fourth quarter of last year, the largest corporate loss in history. The bulk of the payments at issue cover AIG Financial Products, the unit of the company that sold credit default swaps, the risky contracts that caused massive losses for the insurer. It also was revealed over the weekend that American International Group Inc. used more than $90 billion in federal aid to pay out foreign and domestic banks, some of whom had received their own multibillion-dollar U.S. government bailouts. Some of the biggest recipients of the AIG money were Goldman Sachs at $12.9 billion, and three European banks — France's Societe Generale at $11.9 billion, Germany's Deutsche Bank at $11.8 billion, and Britain's Barclays PLC at $8.5 billion. Merrill Lynch, which also is undergoing federal scrutiny of its bonus plans, received $6.8 billion as of Dec. 31. The money went to banks to cover their losses on complex mortgage investments, as well as for collateral needed for other transactions. On ABC's "Good Morning America" Monday, Sen. Richard Shelby said Congress must do everything it can to make sure the government money going to AIG is handled appropriately. "We ought to explore everything that we can through the government to make sure that this money is not wasted," the Alabama Republican said. "These people brought this on themselves. Now you're rewarding failure. A lot of these people should be fired, not awarded bonuses. This is horrible. It's outrageous." Frank said he was disgusted, asserting that "these bonuses are going to people who screwed this thing up enormously." [AP]