US Treasury Secretary Timothy Geithner said on Tuesday that the troubled insurance giant American International Group (AIG) is to pay back the government for hefty bonuses it paid out to its executives.

"We will impose on AIG a contractual commitment to pay the Treasury from the operations of the company in the amount of the retention awards just paid," Geithner said in a letter to lawmakers.

"In addition, we will deduct from the 30 billion dollars in assistance an amount equal to the amount of those payments," he also said.

Geithner's letter came as outrage mounted over the news that the financially strapped the AIG, which has so far received more than US$170 billion in a federal rescue, was paying US$165 million of bonuses to its executives.

He said that US President Barack Obama had asked him "to fully review all additional measures at my disposal to recoup these bonuses and to recover funds on behalf of taxpayers."

Meanwhile, the secretary said he would "work with" AIG chief executive Edward Liddy "on measures to wind down the AIG in an orderly way and protect the American taxpayer."

Also on Tuesday, lawmakers at the US Congress vowed to all but strip executives of the ailing insurer their US$165 million in bonuses.

House and Senate Democrats were crafting separate bills to tax up to 100 percent of generous bonuses awarded by the AIG and other companies rescued by taxpayer money.

Republicans said US President Barack Obama's administration should have done more to stop the bonuses.

Obama pledged Monday his administration will stop the AIG from paying the "substantial sums" of bonuses to its executives.

"How do they justify this outrage to the taxpayers who are keeping the company afloat," the president said, noting that the insurer is in financial straits because of "recklessness and greed."

The AIG, which is now 80-percent owned by the US government, lost US$61.7 billion in the fourth quarter of 2008, marking the largest corporate loss in history.

(Xinhua News Agency March 18, 2009)