"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 in extra pay," Obama said yesterday.

"I mean, how do they justify this outrage to the taxpayers who are keeping the company afloat?"

Obama has directed the Treasury Department to look into ways and means to stop payment of such bonuses.

"In the last six months, AIG has received substantial sums from the US Treasury. I've asked (Treasury) Secretary (Timothy) Geithner to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole," he said.

White House Press Secretary Robert Gibbs said: "This isn't just outrageous and doesn't just sort of violate your sense of commonsense, but it offends our values."

Any person who is subject to these bonuses would have to and should think long and hard about whether, given the performance of the company, this is either warranted or appropriate, Gibbs observed.