LISA MULLINS: President Obama today joined the chorus of outrage directed at AIG. The troubled insurance giant has received $170 billion dollars in federal bailout funds, and now comes word that AIG is planning to dole out lavish bonuses.
PRESIDENT OBAMA: This is a corporation that finds itself in financial distress due to recklessness and greed. Under these circumstances, it's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million dollars in extra pay.
MULLINS: That's Barack Obama earlier today. There's also anger over new disclosures that AIG is paying out billions in taxpayer money to Goldman Sachs and a handful of European banks. The World's Jeb Sharp has more.
JEB SHARP: First came news of the bonuses; then came the news that billions of taxpayer dollars are passing straight through AIG to Goldman Sachs and European Banks, including France's Societe Generale and Germany's Deutsche Bank. Simon Johnson, a professor at the Sloan School of Management at MIT, says anger is broadening.
SIMON JOHNSON: And I think there's a level of frustration with everything that happened around AIG and the level of questioning about motives and ultimate beneficiaries, and the degree and timing of disclosure, that really means you're going to have to have a big, proper public inquiry, presumably convened by Congress in order to ever get past these issues.
SHARP: At the root of the anger, there's a simmering question: Is this really the best possible deal for American taxpayers? Johnson says the size of bonuses going to executives at AIG just underscores that doubt.
JOHNSON: The level of disconnect between their sense of reality and, I would say, the real world in which they and we now live is quite striking, and I think that this kind of behavior and this kind of attitude that they show, the arrogance and the hubris really will not stand.
SHARP: And yet some experts say the bonuses probably have to go through. Andrew Hilton is the director of the London think-tank the Center for the Study of Financial Innovation.
ANDREW HILTON: We paid a lot of kids a lot of money to build products that transferred risk from Deutsche Bank or Goldman Sachs or whatever bank it was to AIG, in return for which AIG got fees, and out of those fees we paid these same kids big bonuses. Now we have to pay these same kids a salary and their bonuses to undo the damage that those products that they sold in the first place did. The reason that we have to pay them this is because they're the only people who understand them.
SHARP: Similarly, the notion of AIG giving billions of U.S. taxpayer money to pay off European banks may be hard to stomach, but it's probably necessary, Hilton says.
HILTON: I think there are an awful lot of people - politicians in the U.S., and indeed politicians in Europe - who hate the idea that money is being transferred either from the U.S. to Europe or from Europe to the U.S, either way. But the fact is that we live in a global society and that AIG, which was an American company, was selling insurance into a global market and, like it or not, its clients were global, and unless we're going to say, ï¿½Okay, we will let AIG go. We will put it into bankruptcy and renege on all these commitments, you can't pick and choose.
SHARP: Still, the popular anger has a function: it forces more accountability and transparency. That's the view of historian Michael Kazin of Georgetown University. He says in good times, Americans don't question the system much, but when financial panic sets in, distrust of banks and insurers reemerges.
MICHAEL KAZIN: Americans in general, as you know, we don't have a very strong class consciousness in the Marxist sense, that is the sense that there is a working class and there is an ownership class and the two are doomed to be in opposition, but we do have a sense that when people make lots and lots of money, they ought to really earn it, you know; they really ought to have done something for it.
SHARP: And that's a hard claim to make at AIG right now. For The World, I'm Jeb Sharp.