President Obama’s apparent inability to block executive bonuses at insurance giant AIG has dealt a sharp blow to his young administration and is threatening to derail both public and congressional support for his ambitious political agenda.
Politicians in both parties flocked to express outrage over $165 million in bonuses paid out to executives at the company, demanding answers from the president and swamping yesterday’s rollout of his efforts to spark lending to small businesses.
The populist anger at the executives who ran their firms into the ground is increasingly blowing back on Obama, whom aides yesterday described as having little recourse in the face of legal contracts that guaranteed those bonuses.
White House press secretary Robert Gibbs, peppered with questions about why the president had not done more to block the bonuses at a company that has received $170 billion in taxpayer funds, struggled for an answer yesterday afternoon. He explained that government lawyers are “looking through contracts to see what can be done to wrest these bonuses from their recipients.”
And, with Obama about to seek even more $ billions to aid the financial system, political outrage is certainly not sufficient to mollify an angry public. The White House initially tried to obscure the flap by blaming President Bush but they have not answered as to why they failed to block these bonuses while they were authorizing an additional $30 Billion in new loans to AIG.
The AIG Bonus Flap has happened on Obama’s watch and he can either take responsibility and expend more of his his political capital or continue to make excuses and pass blame on the previous Bush Administration.
Which will it be, Mr. President?
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