As politicians around the world compete to take the toughest stance against banking excesses, one Republican senator has surely taken an unassailable lead. Last night he suggested that AIG executives should take the “Japanese” approach to responsibility and kill themselves.

Charles Grassley, Senator for Iowa, was speaking after it emerged that AIG, the stricken insurance giant, had awarded its staff $165 million in bonuses despite accepting a multi-billion dollar government bailout.

In an interview with a local radio station, Mr Grassley said: “I would suggest the first thing that would make me feel a little bit better toward them is if they’d follow the Japanese example and come before the American people and take that deep bow and say, I’m sorry, and then either do one of two things: resign or go commit suicide.

“And in the case of the Japanese, they usually commit suicide before they make any apology.”

The Republican senator’s remarks came during an interview with WMT, a radio station in Cedar Rapids, Iowa. He has frequently spoken strongly about Wall Street’s responsibility for the credit crunch but never in such offensive language.

Casey Mills, a spokesman for Mr Grassley, tried to play down the comments, saying the senator was not calling for AIG executives to kill themselves, but that those who accept tax dollars and spend them on travel and bonuses do so irresponsibly.

“Senator Grassley has said for some time now that generally speaking, executives who make a mess of their companies should apologise, as Japanese executives do,” he said. “He says the Japanese might even go so far as to commit suicide but he doesn’t want US executives to do that.”

The senator’s remarks added to a chorus of public outrage led by President Obama. Yesterday, the President lambasted the insurance giant for “recklessness and greed” and pledged to try to block payment of the bonuses

He said he had asked Timothy Geithner, the Treasury Secretary, to use the leverage the government had to pursue “every legal avenue” to push back against the bonus payments.

President Obama said: “Under these circumstances, it’s hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. How do they justify this outrage to the taxpayers who are keeping the company afloat?”

The President said the bonus situation underscored the need for overall financial regulator reform and said the government needed “some form of resolution mechanism in dealing with troubled financial institutions, so we have greater authority to protect the American taxpayer and our financial system in cases such as this".

The insurer has received $173 billion in government bailout money. The bonuses are being paid to executives in the business unit that brought the insurer to the brink of collapse last year.

Times Recommends

• UN may halt 400-year-old 'freedom of the seas'
• Where the Rosetta belongs can’t be set in stone
• Gas deal on hold, but Ukraine may pay in the end