AIG chief gets Capitol Hill grilling over bonuses

— -- Fury over $165 million in bonuses paid to executives at AIG mounted Wednesday as Congress grilled the firm's CEO and President Obama vowed to do "everything we can" to get the money back.

"Washington's all in a tizzy and everybody's pointing fingers," Obama said at a town hall meeting in Costa Mesa, Calif., attended by thousands. "I know a lot of you are outraged about this. Rightfully so."

AIG CEO Edward Liddy was lambasted on Capitol Hill even though he joined the company after the bonus plan was put in place. He told a House subcommittee in Washington that AIG has "heard the American people loudly and clearly" and some executives will return their entire bonus.

New York Attorney General Andrew Cuomo says 73 employees got bonuses of at least $1 million at AIG, which has received $170 billion in taxpayer bailout funds. The Obama administration paid out $30 billion to AIG a few weeks ago.

Republicans assailed Democrats for protecting the bonuses in the recently-passed stimulus bill. Iowa Sen. Chuck Grassley, top Republican on the Finance Committee, said the provision was "written behind closed doors" by Democratic leaders who refused Republican input. Democratic Sen. Chris Dodd of Connecticut, told CNN he added it at the suggestion of Treasury Department officials whom he did not identify.

Before leaving for California, Obama defended Treasury Secretary Timothy Geithner.

"He is making all the right moves in terms of playing a bad hand," he said.

Liddy said the bonuses were paid to retain employees needed to help dismantle the insurance giant's financial products division. Rep. Paul Kanjorski, D-Pa., chided Liddy, who came out of retirement to work at AIG for $1 a year, for letting the flap imperil support for funds to prevent a "depression."

The House might vote today on legislation that would tax away 90% of extra pay at bailed-out companies. Mortgage finance giants Fannie Mae and Freddie Mac said they also plan to pay bonuses this year.

Obama was asked about job losses, education and illegal immigration at the town-hall meeting and assured his audience that better times lie ahead.

Contributing: William M. Welch in Costa Mesa, Barbara Hagenbaugh in Washington and Pallavi Gogoi in New York.