President Obama ordered treasury secretary Timothy Geithner Monday to take all legal action needed to stop the payment of nearly $165 million in bonuses handed out by AIG to its executives, according to IHT.

AIG, a company that is currently staying afloat only because of federal bailouts, announced the bonuses on Sunday. President Obama, CNN reports, called the action an “outrage” because AIG “is a corporation that finds itself in financial distress due to recklessness and greed.”

Over the past six months, AIG has received nearly $173 billion in government bailout money, which is provided by taxpayers. Obama spared AIG’s new CEO Edward Liddy of criticism, saying the contracts that led to these bonuses were drafted last year. Nevertheless, they should have been shredded.

Obama was visibly dismayed and angry at the press conference. “All across the country, there are people who are working hard and meeting their responsibilities every single day, without the benefit of government bailouts or multimillion-dollar bonuses. You’ve got a bunch of small-business people here who are struggling just to keep their credit line open,” he said, referencing the tough times faced by many working Americans.

Obama’s words have garnered support from other democrats as well. Connecticut Sen. Christopher Dodd noted in a written statement that other companies receiving federal bailouts have been ordered to forgo bonuses, and there is no reason that AIG should view themselves above this rule.

Obama also told reporters that he would work with Congress to change laws in an effort to ensure this would never occur again.

Currently, New York Attorney General Andrew Cuomo is trying to work with Liddy to find out who was set to receive these bonuses and if any of them have been paid. Cuomo ordered Liddy to surrender a list of potential bonus receivers by 4 p.m. Monday, saying that if he failed to receive them he would seize them by order of subpoenas.

“Covering up the details of these payments breeds further cynicism and distrust in our already shaken financial system,” said Cuomo, CNN reports.

AIG, the global insurance giant that has fallen on hard economic times to say the least, has informed Manchester United of the English Premiere League that they will not be renewing their sponsorship. The four-year, $100 million deal expires May 2010 and AIG says they are already trying to re-work that last year.

“In October, AIG told Manchester United that it is not renewing its sponsorship,” the company told Reuters.

One the world’s largest insurers, AIG had to accept $85 billion from the United States government to avoid bankruptcy. That number soon ballooned to $152 billion.

So now, the company is trying to cut costs and ending their sponsorship of one of the world’s most popular sports teams is one way to do it.

Some might argue that taking an executive retreat to the tune of $443,000 shortly after the bailout isn’t a frugal way to do business, but that’s neither here nor there.

The replacement for AIG? It could be India-based real estate and financial services giant Sahara.

“The process for the 2010 season has already started,” Man. U. spokesman Philip Townsend said. “Sahara is one of a number of companies who have expressed an interest.”

The following is a statement released by the Federal Reserve Tuesday regarding American International Group Inc:

The Federal Reserve Board on Tuesday, with the full support of the Treasury Department, authorized the Federal Reserve Bank of New York to lend up to $85 billion to the American International Group (AIG) under Section 13(3) of the Federal Reserve Act. The secured loan has terms and conditions designed to protect the interests of the U.S. government and taxpayers.

The Board determined that, in current circumstances, a disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance.

The purpose of this liquidity facility is to assist AIG in meeting its obligations as they come due. This loan will facilitate a process under which AIG will sell certain of its businesses in an orderly manner, with the least possible disruption to the overall economy.

The AIG facility has a 24-month term. Interest will accrue on the outstanding balance at a rate of three-month Libor plus 850 basis points.

AIG will be permitted to draw up to $85 billion under the facility.

The interests of taxpayers are protected by key terms of the loan. The loan is collateralized by all the assets of AIG, and of its primary non-regulated subsidiaries. These assets include the stock of substantially all of the regulated subsidiaries. The loan is expected to be repaid from the proceeds of the sale of the firm’s assets. The U.S. government will receive a 79.9 percent equity interest in AIG and has the right to veto the payment of dividends to common and preferred shareholders.

In an unexpected move, the Federal Reserve Bank of New York will loan nearly $85 billion to mortgage giant American International Group, effectively rescuing them from bankruptcy.

The loan was approved by the Federal Reserve Board, and in exchange, the federal government will receive an almost 80% stake in the company, giving it complete control over its actions.

The government had first avoided lending the money to AIG, in hopes that other investment firms would put together a near $75 billion rescue fund.‚  After it became evident that private investment firms refused to lend aid, the reserve board was forced to take action, since AIG has an even larger market influence than Lehman Brothers.

The federal reserve did not aid Lehman Brothers; they recently filed for the largest bankruptcy in American history.

AIG is the nation’s largest insurer.‚  If it filed bankruptcy, the move would majorly effect world markets, since the company has over $1.1 trillion in assets, according to CNNMoney.

AIG will sell some of its businesses, and replace its executive staff, the federal government has control over these decisions, and as of yet, no announcements have been made.

All taxpayers will be protected.