Treasury to Deduct $165M From AIG Bailout to Account for Bonuses

By: • Wed, Mar 18 2009, 9:28 AM

The next bail out payment due from the U.S. Government to troubled insurance giant AIG will exclude the amount that was paid by the company to employees in new bonuses.

In a letter written to congressmen on Tuesday, U.S. Treasury Secretary Timohty Geithner said $165M will be taken from the $30bln the firm is due to receive as part of the latest branch of the bail-out package.

"We will impose on AIG a contractual commitment to pay the Treasury from the operations of the company the amount of the retention awards just paid," Mr Geithner's letter said.

"In addition, we will deduct from the $30bn in assistance an amount equal to the amount of those payments."

On Monday President Barack Obama called the AIG bonuses "an outrage" after learning that American International Group was giving executives millions of dollars in new bonuses even though it received a government bailout of more than $170bln.

AIG said it paid out the executive bonuses last Friday to meet a contractually obligated Sunday deadline.

On Tuesday a letter from attorney general of NY, Andrew Cuomo, revealed more details of the bonuses, sparking rage among congressmen.

Cuomo revealed that 73 AIG executives, including people who no longer work for AIG, were each awarded bonuses worth more than $1M.