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Outrage over AIG dominates US media

US reporting on the $165m (£116m) bonuses pledged to executives of bailed-out insurer AIG has focused on the anger felt by many Americans at what is widely seen as Wall Street looking after itself at taxpayers' expense.

US President Barack Obama, 16 March
Mr Obama has to be careful not to alienate financiers, analysts say

President Barack Obama joined the chorus of condemnation on Monday, telling Treasury Secretary Timothy Geithner to "pursue every single legal avenue" to block the payouts.

The Washington Post reported a "tidal wave of public outrage" swamping the firm, to the extent that armed guards were posted outside the Connecticut offices of AIG's Financial Products division.

"Inside, death threats and angry letters flooded e-mail inboxes. Irate callers lit up the phone lines. Senior managers submitted their resignations. Some employees didn't show up at all," the paper reports.

Meanwhile, ABC News's White House correspondent Jake Tapper, writing for his Political Punch blog , cites a suggestion by Iowa Republican Senator Chuck Grassley that the AIG executives "should consider following what he described as the Japanese model of shamed corporate executives: apology or suicide".

AIG: QUICK FACTS
30 million US policy holders
Operates in 130 countries
Provides insurance to 100,000 companies and other entities

The Huffington Post news site's Nicholas Graham charges the Obama administration with shifting position on AIG - having previously suggested its contracts would have to be respected - in the face of "a growing chorus of national outrage".

By Monday, he writes, "the populist backlash had reached a level which the Obama administration could not dismiss, and the result was the president promising to use every means available to stop AIG from paying out these bonuses".

USA Today similarly reports that Mr Obama "latched on to the latest round of populist anger over corporate greed".

That anger was roundly expressed by leaders of both parties in Congress, the newspaper says, and "outrage dominated the day on blogs, cable news and radio talk shows".

'Obama's bind'

But there are also those who argue that, however much politicians may need to appear to share public fury over the bonuses, the approach may prove counterproductive.

AIG built this bomb, and it may be the only outfit that really knows how to defuse it
Andrew Ross Sorkin
New York Times

New York Times business writer Andrew Ross Sorkin says in its Dealbook blog that while "it sure does sting" to see AIG executives get their bonuses, taxpayers may have to "swallow hard and pay up, partly for our own good".

His reasoning? If US businesses start worrying that the government will force them to break inconvenient contracts, it will set the financial system on an even more slippery slope.

More soberingly, he adds, it may be in taxpayers' best interests to keep the firm's "brainiacs" in their seats simply because "AIG built this bomb, and it may be the only outfit that really knows how to defuse it".

It is a view echoed by the Wall Street Journal's Jonathan Weisman, Sudeep Reddy and Liam Pleven , who talk of "the bind that Mr Obama finds himself in" and the resultant confusion in the White House response.

"[Mr Obama] needs to convince Americans he shares their mounting fury over the hundreds of billions of taxpayer dollars being pumped into companies like AIG," they write.

"At the same time, he needs the executives and employees of those companies to help the government untangle the current financial mess."

For Mr Obama the issue "has become a critical political test", they add, because "anger over the bonuses could make it harder for the administration to extract any additional funds it needs from Congress" for the bailout of the financial sector.

Now's a time when everyone in Washington is suddenly going to be channeling his/her inner-populist
Domenico Montanaro
NBC News's First Read

Writers for the US political website Politico agree, saying "AIG's woes threaten to severely complicate Obama's hopes of returning to the well - again - for more bailout cash".

And for all that the Obama team has tried to stress that it was the Bush administration that supported AIG's bailout last year, the haste of the White House's response to the latest crisis "underscored a new reality: This is President Barack Obama's bailout now".

Domenico Montanaro, writing in NBC News's First Read column , says the current anger at Wall Street could help the Democrats push to allow the Bush tax cuts for the wealthy to expire.

"Still, now's a time when everyone in Washington is suddenly going to be channelling his/her inner-populist. Who will have the most credibility doing it?" he asks.

"As for the short term, Congress is going to want a pound of flesh (and then some) from AIG."



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