AIG Will Repay Taxpayers for Bonuses

The Treasury Department will order embattled insurance giant American International Group Inc. to repay U.S. taxpayers up to $165 million that the company is giving employees as bonuses, Treasury Secretary Timothy  Geithner said late Tuesday.Acknowledging "considerable outrage" about the bonus payments, Geithner said AIG will pay the Treasury an amount equal to the payments, and the Treasury will deduct that amount from the $30 billion in government assistance that will soon go to the company. "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," Geithner said in a letter to congressional leaders.Geithner is using the controversy over employee pay at AIG to press Congress to work with the Obama administration to shore up regulations of the financial industry. The treasury secretary, who has been criticized for his handling of AIG's employee bonuses, said Tuesday in a letter to House Speaker Nancy Pelosi that "we should not lose focus on the larger issue it raises.""This situation dramatically underscores the need to adopt, as a critical part of financial regulatory reform, an expanded 'resolution authority' for the government to better deal with situations like this," Geithner says in his letter. He also outlines in the letter how the administration learned of the $165 million in bonuses and how it is responding.AIG has been the recipient of more than $170 billion in federal aid, part of a effort to rescue the giant insurance company from collapse. The federal government now holds a 80 percent stake in the company, further fueling outrage over the bonuses that were mandated by employee contracts that predated the bailout money.