Report: AIG asks Obama team to approve bonus payments

NEW YORK -- American International Group is consulting with the federal government about its plans to pay millions of dollars in retention incentives and bonuses, a person familiar with the situation said.

While the company isn't required to get the government's blessing because the payments are actually for 2008 employment contracts, the Washington Post said executives are reluctant to move forward with installments coming due next week without official approval.

Feinberg has the power to reject pay plans he deems excessive at companies which benefited from large infusions from the government's $700 billion bank bailout fund. Feinberg also has authority to review compensation for the top 100 salaried employees at those firms. AIG is among the companies whose pay practices the government now oversees.

New York-based AIG remains the focus of intense scrutiny, after becoming one in a string of corporate calamities and a touchstone for public fury. The huge volume of credit default swaps — a form of insurance against bond defaults — sold by AIG, coupled with rising levels of defaulted mortgage and other debt, threatened the company's existence and prompted the government to step in.

In September, the government provided AIG with an $85 billion rescue package amid the mushrooming credit crisis. In return, they took about an 80% stake in the New York-based insurance giant. Since then, the government has provided additional rounds of support. AIG's available loan package now totals $182.5 billion, though AIG has not tapped all of the funds.

The $450 million in bonuses that AIG allocated in 2008 for employees, including to traders in the financial products unit that brought it to the brink of collapse, fueled public and congressional outrage. The first installment of those payments earlier this year sparked legislation in Congress to slap punishing taxes on big bonuses at AIG and other companies bailed out by taxpayers, though the Senate didn't act on that plan.