Treasury Secretary Tim Geithner promised last night that taxpayers wouldn't be paying a penny toward AIG's massive executive bonuses, Bloomberg reports. He explained in a letter to lawmakers that the government would require the insurer to pay back the $165 million from company operations and that an equal amount would be deducted from the next round of bailout payments. Geithner also vowed to speed up AIG's restructuring.
In the face of public outrage over the AIG payments, lawmakers are scrambling to find ways to reclaim bonus payments from all companies receiving federal bailout funds. Proposals before lawmakers include authorizing the attorney-general to reclaim “prior and future excessive compensation” payments, barring retention bonuses at firms getting Treasury funds, and, most controversially, reclaiming the cash through the tax code. (Read more Timothy Geithner stories.)