Pay Czar Going After AIG Bonuses—Again

But legal hurdles loom for pre-bailout deals
By Kevin Spak,  Newser Staff
Posted Oct 14, 2009 8:59 AM CDT
Kenneth R. Feinberg speaks at his office in Washington, Aug. 15, 2009.   (AP Photo/Charles Dharapak, File)
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(Newser) – Pay czar Kenneth Feinberg is making another run at AIG’s bonus payouts—or trying to, with the help of a little arm twisting. Feinberg doesn’t have authority over the$198 million in bonuses promised to employees at the infamous trading unit because the contracts were created before the bailout. So instead, he’s threatening to slash the pay of other AIG executives, which he does control, if they don’t claw back the bonuses, the New York Times reports.

The bonuses are part of a two-year retention program begun in January 2008. A similar $165 million payout in March sparked a similar uproar, which AIG quelled by asking employees to pay back $45 million of it. But so far only $19 million has been returned; the TARP inspector general says some employees resigned rather than return the money.