Outraged Obama tries to block AIG £117m bonus payouts funded with bailout cash

The US government is considering renegotiating the £30bn cash injection it most recently gave AIG after it news emerged that the troubled insurance firm plans to give staff $165m (£117m) in bonuses.

Seven London-based executives of AIG, which was bailed out by the US government last year, were granted bonuses of at least $3m (£2.1m) each.

The move has outraged president Barack Obama, who said the company’s financial problems were the result of “recklessness and greed”. He has pledged to do anything in his power to block the payments, working with new AIG chief executive Edward Liddy to address the issue. The latest $30bn bailout – on top of the $143bn (£101bn) of aid since the company almost collapsed in September – may be tweaked.

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AIG is fighting for bonuses to be paid to its staff on the grounds that they are contractually entitled to them.

Last month the Royal Bank of Scotland (RBS) bowed to government demands to slash investment banker bonuses to £175m and scrap performance-related payouts.