WASHINGTON (AP):

United States President Barack Obama yesterday issued a blistering attack on American International Group and pledged to stop the struggling insurance and investment giant from paying out millions in executive bonuses.

AIG has taken US$170 billion in federal bailout funds, and the company announced over the weekend that it was bound contractually to pay out tens of millions in executive bonuses, prompting a storm of criticism inside the Obama administration.

The US$165 million was payable to executives by Sunday and was part of a larger total payout reportedly valued at US$450 million.

"It's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay," Obama said at the outset of an appearance to announce help for small businesses hurt by the deep recession.

"How do they justify this outrage to the taxpayers who are keeping the company afloat," the president said.

AIG reported this month that it had lost US$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.

Play by the same rules

Said Obama: "All across the country, there are people who work hard and meet their responsibilities every day, without the benefit of government bailouts or multimillion-dollar bonuses. And all they ask is that everyone, from Main Street to Wall Street to Washington, play by the same rules."

He added: "This isn't just a matter of dollars and cents. It's about our fundamental values."

Noting that AIG has received substantial aid from the federal government, Obama said he has asked Treasury Secretary Timothy Geithner "to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole".