Following up on INN's coverage of AIG's most recent financial quagmire, President Barack Obama yesterday said his administration would "pursue every single legal avenue to block" bonuses to employees at AIG's Financial Products business. An additional $230 million of bonus payments is pending, after $55 million was paid in December and $165 million last Friday. According to American Banker, an additional $230 million is pending.

The Obama administration plans to attach new conditions to an upcoming bailout infusion into the conglomerate that would recover, either by a reduction in the next infusion, or by some other means, the bonuses already paid.

New York Attorney General Andrew Cuomo announced he is seeking to force the company to disclose the names of the bonus recipients.

According to the New York Times, by seeking to link repayment of the bonus money to the coming $30 billion in assistance, "the administration seemed to leave open the possibility that the company would effectively be repaying taxpayers with taxpayer money."

Additionally, the Wall Street Journal reported today that President Obama is in a bind that could hurt his ability to secure additional funds to rescue the financial system. "He needs to convince Americans he shares their mounting fury over the hundreds of billions of taxpayer dollars being pumped into companies like AIG. At the same time, he needs the executives and employees of those companies to help the government untangle the current financial mess."

Yet a compensation consultant quoted by New York Times, "Dealbook" columnist Andrew Ross Sorkin said that tearing up the bonus contracts would "put American business on a worse slippery slope than it already is. Business agreements of other companies that have taken taxpayer money might fall into question. Even companies that have not turned to Washington might seize the opportunity to break inconvenient contracts."

He also wrote that AIG "built this bomb, and it may be the only outfit that really knows how to defuse it." If employees "leave—the buzz on Wall Street is that some have, and more are ready to—they might simply turn around and trade against AIG's book." An editorial said that Obama's "tough talk" on the AIG bonuses conflicted with top economic adviser Lawrence Summers' citation of legal obstacles to stopping them during a television appearance Sunday. "It is frustrating enough for Americans to try to figure out which part of that mixed message reflects the administration's true position."

On the "bigger issue"—payouts of more than $100 billion of bailout money to make AIG counterparties and customers whole — the piece asked for an accounting of the rest of the bailout funds for AIG and wondered why Goldman's hedges didn't cover its exposure instead of taxpayers. If AIG made "unconscionable bets" as Fed Chairman Ben Bernanke said on television, "it's also possible that both sides" of AIG's trades "are trying to play an unseemly game to their own advantage."

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