Treasury rapped on AIG on bonuses

October 14, 2009 | By Jim Kim

So you thought AIG (AIG) bonus-gate was over? So did a lot of people. But the Treasury's special pay master Kenneth Feinberg and Neil Barofsky, the special inspector general for TARP, have revived the issue.

Feinberg is pressing the insurer to has reduce the $198 million on bonus payments the firm intends to give, reports Reuters. Recall that a huge public outcry erupted after the bonus plans were made public. AIG asked for employees to voluntarily return the payouts. But Reuters notes that "only a partial collection of the repayments asked for has been received." It's unclear how much of a cut Feinberg is asking for. The report by Feinberg suggests that regulators erred in approving the payments, but he faults staff for not keeping Geithner, then at the New York Fed, up to speed on developments.

Barofsky goes bit further and concludes that staff should have kept him better informed. "This is a failure of communication and a failure of management," Barofsky testified in front of a House committee. He says Geithner must still shoulder the blame. It's not clear if Feinberg has the authority to compel a pay cut. We'll see where this goes.

For more:
- here's the article
- here's an article on Barofsky