AIG last week agreed to freeze distributions from a $600 million employee compensation and bonus pool, as well as severance and other payments promised to its former chief executive officer and the head of its controversial Financial Products unit–at least until the company repays loans from the U.S. Treasury.

Following criticism by state and federal officials of the company's pre- and post-bailout actions, AIG took the latest in a series of moves over the past two weeks in response to a letter from New York's attorney general.

"To be clear, it is my position that until the taxpayers are repaid with interest the more than $120 billion that has been used in the rescue financing of AIG, no funds should be paid out of these pools to any executives," New York Attorney General Andrew Cuomo said in a letter to American International Group CEO Edward Liddy on Oct. 22.

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