AIG, says pay issue is 'largely' solved

After receiving billions of dollars in taxpayer bailout funds, AIG's bonus pay plan of $165 million a year ago sparked an uproar in Washington. At that point, employees -- notably those in the financial product division that lost billions of dollars on credit default swaps -- agreed to return $45 million of their bonus pay, The Wall Street Journal reported Wednesday.

But employees only returned $19 million.

This year, with $195 million in the bonus pool, the company said it had secured an agreement with current and former employees to reduce that by $20 million. AIG also said it would work to recoup another $6 million.

A spokesperson for the Treasury Department said the department is "encouraged that AIG employees are making good on the repayment pledges they made last spring."

But Rep. Darrel Issa, R-Calif., said, "either the payments are justified and the (Obama) administration has an obligation to explain that … or they are not and they should come forward and say so."

AIG said this year's deal with employees "allows us to largely put the matter behind us."

Copyright 2010 United Press International, Inc. (UPI).