Obama says 'buck stops with me' on AIG

updated 9:23 p.m. ET March 18, 2009

WASHINGTON - As President Barack Obama arrived Wednesday in California for a two-day trip, he continued to face questions over the AIG executive bonus scandal that has gripped Washington in recent days.

Speaking with reporters at the White House before boarding Marine One, the president was peppered with questions about the $165 million in post-bailout bonuses paid out to American International Group Inc. employees.

Obama again called the situation "outrageous." But he said the problem goes deeper than that.

"Just as outrageous is the culture that these bonuses are a symptom of, that has existed for far too long: excess greed, excess compensation, excess risk-taking," he said.

The president said he wants legislation providing greater regulation of financial institutions like AIG so taxpayers won't be left "holding the bag" when companies fail.

"As we work toward getting ourselves out of the recession, I hope that Wall Street and the marketplace doesn't think that we can return to business as usual," he said.

"The buck stops with me," Obama told reporters.

He revealed that he and members of his White House Economic Council have begun discussions with leading congressional players, including Rep. Barney Frank, D-Mass., on the possibility of legislation that would create a new regulatory entity along the lines of the Federal Deposit Insurance Corporation to give the government more authority over some financial institutions.

Obama also said he has "complete confidence" in Treasury Secretary Timothy Geithner, whose handling of the situation with AIG has come under harsh criticism in Congress.

Obama said that Geithner has been "making all the right moves in playing a bad hand."

Headed West
The president is visiting a state where one in eight Americans has been ravaged by recession, a housing meltdown and double-digit unemployment.

While it was a  a refuge for Richard Nixon, a ranch for Ronald Reagan and a playground for Bill Clinton, California could become a political test for Obama, whose administration has been trying to find its voice on the economy.

Video   Obama discusses job losses, AIG anger March 18: President Barack Obama hosted a town hall meeting in Costa Mesa, Calif., where the questions focused on unemployment and job search woes. NBC's Savannah Guthrie reports. Nightly News

His schedule includes a stop on Jay Leno's stage in Burbank and another town hall-style meeting in downtown Los Angeles on Thursday.

Speaking at a town hall meeting in Costa Mesa, Obama said the United States is a nation of immigrants but the country must have control over its borders. Obama said immigration is a high-emotion issue that cannot be dealt with in pieces. He says he wants to work with leaders in Congress and in Mexico to come up with a comprehensive plan.

Obama says it's important for longtime illegal immigrants to have a path to citizenship so they can join unions and get protection from employers who exploit them. He says those illegal immigrants could earn U.S. citizenship if they pay a fine and learn English.

With the furor over the AIG bonuses, "if he doesn't have some really good answers, this could be a nightmare. It's not going to be enough to say, 'I feel your anger and we are looking into it,'" said University of California, Berkeley, political scientist Bruce Cain. "There has to be some sort of decisive action."

'There needs to be accountability'
Judy Chen-Lee, a laid-off job counselor for the city of Santa Ana, has a ticket for the Orange County event and hopes to press the president about getting people back to work.

The economic stimulus money should be "dedicated to those most in need, who need jobs and retraining," she said. "The AIG situation is sad. There needs to be accountability."

Normally, a trip to the Democratic-leaning state would represent a welcome respite for a Democratic president. Clinton was here more than 70 times during his presidency, often to attend lavish political fundraisers with his golf clubs in tow.

Obama, who spent his early college years in California, won a 24-point victory here in November and his administration is thick with Californians.

Video   Prickly open to AIG hearing March 18: Opening remarks at the House AIG hearing ran the gamut from anger at AIG, to questions over the firm's bailout, to frustration with the Obama administration. CNBC

National surveys show Obama remains personally popular, despite some unease over policy. But recent polls confirm the obvious: At a time of economic stress residents are anxious, frayed. California is at the center of the mortgage crisis, and the number of residents fleeing the nation's most populous state has been rising.

The state will be a key to any national recovery; California on its own is the world's eighth-largest economy. Obama's green jobs agenda is similar to ideas being pushed in California.

His stop on Leno's couch will mark the first time a sitting president has hit the late-night talk show circuit. Leno is known for banter and laughs, not grilling politicians, so it will give Obama a deferential platform to talk about the economy. The show has about 5 million viewers — a Main Street audience mostly beyond the Beltway.

Mixed messages?
The message on the economy has appeared to shift. During the fall presidential campaign, Obama relentlessly criticized his Republican opponent, Sen. John McCain, for declaring, "The fundamentals of our economy are strong."

But last weekend, a White House adviser said the economy is fundamentally sound despite the temporary "mess."

Just a week ago, Peter Orszag, director of the White House Office of Management and Budget, declared that "fundamentally, the economy is weak." Days later, Obama told reporters he was confident in the economy.

How much Obama — or any president — can do during an economic slowdown is always in question.

"The economy everywhere is in big trouble, and these are problems that started long before he came into office," said Christopher Thornberg of Beacon Economics in Los Angeles. "Obama doesn't walk on water. He can't wave a magic wand and fix all that."

When Reagan occupied the White House, his first Air Force One trip was to California for a weekend at his ranch in the Santa Ynez mountains northwest of Los Angeles. When Nixon was in office, his seaside home in San Clemente became known as the Western White House, a hideaway during a turbulent presidency.

Obama is popular in reliably Democratic Hollywood, and money from the entertainment industry helped finance the richest campaign in presidential history.

When asked whether Obama planned to meet with any celebrities on his visit, White House spokesman Nick Shapiro declined comment.

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