Barack Obama vowed yesterday to pursue “every single legal avenue” to block $165m (€127m) in bonus payments by AIG, amid mounting anger over the stricken insurance group's use of federal bail-out funds.

The US president's remarks came as Andrew Cuomo, the New York attorney-general, opened an investigation into the bonuses, demanding a list of AIG employees whose salaries were topped up. Mr Obama voiced “outrage” that a group dependent on taxpayer support for its survival was paying bonuses at a time when ordinary Americans were struggling to make ends meet.

“This is a corporation that finds itself in financial distress due to recklessness and greed,” he said. “Under these circumstances, it's hard to understand how derivative traders at AIG warranted any bonuses, much less $165m in extra pay.”