The Treasury Dept. is pressing AIG (NYSE:AIG), the international insurer whose bonuses and perks set off a political firestorm earlier this year, to reduce $198 million in scheduled retention payments.
According to DJ newswire, Obama administration’s pay czar, Kenneth Feinberg, has informed AIG management that the retention payments for AIG’s financial products division should be reduced. Feinberg hasn’t specified however to the insurer what figure would be acceptable.
Based on a report from the special inspector general for the government’s TARP program-Neil Barofsky, the decision on the scheduled retention payments is affecting efforts to recoup $45 million in retention payments made to AIG employees in March of this year. Barofsky’s report, notes DJ’s article, also found that only $19 million of the $45 million in pledged repayments had been received by the end of August.
The pay issue has been politically tricky for both Wall Street and policy makers. Earlier this year, those payouts were a source of frustration against Washington’s willingness to rescue large financial firms at a time when individuals and small businesses were faced with the effects of a worsening recession.