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JACKI LYDEN, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Jacki Lyden. Today was quite the payday for some executives at AIG.

Even though the insurance firm is broke, it paid out bonuses totaling $165 million. The money comes from taxpayers, funneled through the multi-billion-dollar bailout plan.

The president's top advisors and congressional leaders say they're outraged but that they can't do anything about it. NPR's Robert Smith reports.

ROBERT SMITH: Forget four-letter words. The newest dirty word on Capitol Hill has only three letters.

(Soundbite of television program, "This Week with George Stephanopoulos")

Mr. LARRY SUMMERS (Chief Economic Advisor to President Barack Obama): There are a lot of terrible things that have happened in the last 18 months, but what's happened at AIG is the most outrageous.

SMITH: That's Larry Summers, President Obama's chief economic advisor. He spoke on ABC's "This Week with George Stephanopoulos."

Ms. SUMMERS: What that company did, the way it was not regulated, the way no one was watching, what's proved necessary, it is outrageous.

SMITH: What AIG executives did was to make trillions of dollars of bets that subprime mortgages could never go bad. When they tanked, the government felt compelled to prop up the company with $170 billion in taxpayer funds. Even with the money, AIG just posted the largest corporate loss in history.

Summers can't, however, blame the owners of AIG because that would be you and me. After the bailout, taxpayers now control 80 percent of the company, and Summers says that we, yes we, are obligated to give those bonuses to the people who ran the company and the economy into the ground because they signed contracts before the company crashed.

Mr. SUMMERS: We are a country of law. There are contracts. The government cannot just abrogate contracts. Every legal step possible to limit those bonuses is being taken by Secretary Geithner.

SMITH: The Treasury Secretary reportedly had some stern words with the company's chairman this week. Edward Liddy, who was chosen by the government to run AIG, wrote in a letter yesterday that he, too, thought the bonuses were distasteful but that his hands were tied. And Liddy added this thought: AIG needs to retain the best and brightest talent if it's ever going to pay the American taxpayers back.

They're not buying that argument on Capitol Hill. Republican Senator Mitch McConnell, speaking on ABC's "This Week," raised the idea that perhaps the bonuses could be rescinded if there was some sort of fraud involved.

(Soundbite of television program, "This Week with George Stephanopoulos")

Senator Mitch McConnell (Republican, Kentucky): Did they enter into these contracts knowing full well that as a practical matter, the taxpayers of the United States were going to be reimbursing their employees, particularly employees who got them into this mess in the first place?

SMITH: Democratic Congressman Barney Frank agreed that the government has to do everything to try to recover the bonuses. Speaking on "Fox News Sunday," Frank says if we can't get the money, at least we can get the people responsible.

(Soundbite of television program, "Fox News Sunday")

Representative BARNEY FRANK (Democrat, Massachusetts): Who said and at what point we're going to give these bonuses no matter what? And I do think it's inappropriate for those people to stay in power at that company.

SMITH: Should some at AIG lose their jobs over the bonuses, at least they'll have a cushion to fall back on. According to the New York Times, the highest bonus guaranteed under the contract is $6.5 million. Seven executives in the very same unit that brought down the company will get more than $3 million each. Robert Smith, NPR News, New York.

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