WASHINGTON–American International Group said a group of employees, agents and executives have agreed to defer payment of $93.3 million available to them through deferred compensation plans.

The decision was just one reaction to members' of Congress expressions of outrage over the lack of oversight by the government of bailout programs devised to save financial services industry companies.

The AIG decision was announced Wednesday. On Friday, reacting to the general criticism of the lack of oversight of government bailout programs, Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, introduced legislation that would substantively revamp them.

Specifically, provisions of the bill Rep. Frank introduced late Friday would place more severe executive compensation requirements–already placed on automakers–for financial firms that participate in the support program.

Specifically, the proposed legislation would prohibit any bonus or incentives to the 25 most highly compensated employees; ban any compensation plan that would encourage the manipulation of earnings; and require companies to divest their private aircraft or leases.

But several business groups are voicing opposition to a proposal that would apply those provisions retroactively to firms already participating in the program. “If they don't like it, then they can give the money back,” Rep. Frank said at a briefing for reporters.

The AIG decision was disclosed by two Democratic members of Congress: Rep. Paul Kanjorski, Pa., chairman of the House Financial Committee's Capital Markets Subcommittee, and Rep. Joseph Crowley, New York, a member of the House Ways and Means Committee.

The two congressmen had sought changes in the plans to distribute the funds after AIG disclosed that it planned to terminate several deferred compensation plans and accelerate the payout of $367 million to several thousand AIG employees and agents.

They voiced criticism of the government's lack of oversight of AIG's compensation policy in the wake of the government's decision to loan them more than $150 billion to save the firm from bankruptcy and concerns about disruption to the financial services system that might have resulted.

Regarding the AIG action last week, an AIG spokesman said 559 employees and agents had agreed to defer payment of $90.3 million owed to them through AIG deferred compensation plans.

AIG also identified $3 million that would go to several of the top 17 AIG executives who are subject to limits on compensation under the economic rescue package which was enacted Oct. 3, the congressmen said in a statement and AIG confirmed.

AIG said the company at the congressmen's request had agreed to revise its payout plan so that it does not apply to the top 17 executives, resulting in a total of $93.3 million that will no longer be paid out at this time.

AIG said that a group of executives had agreed to forego immediate payment of an additional $3 million contained in deferred compensation plans.

The other funds have been paid.

But, AIG confirmed, the money is ultimately due the employees, and company spokesman, Peter Tulupman, could not say if the money would be paid under a definite time period.

These moneys must by law be paid unless the company files for bankruptcy. In that case, the employees would become general creditors of the bankruptcy estate, the spokesman confirmed.

“While I commend AIG for cooperating with our inquiry, I still have many questions about the developments that led to a federal rescue of AIG, and the Federal Reserve's and the Treasury's ongoing oversight, or lack thereof, of that intervention,” Rep. Kanjorski said. “This case provides a prime example of how a minimal review of AIG can result in a better use of taxpayer money.”

At the same time, the two congressmen complained about the lack of oversight over the government loans to AIG under the rescue plan.

They said they would send to Federal Reserve and Treasury Department officials a request that they explain what system of review and oversight has been established for AIG and why this oversight system approved $93.3 million in questionable “retention” payouts to senior AIG executives and former AIG employees and agents.

The letters would be sent to Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson Jr., they said. AIG management has said the retention payments are necessary to prevent staff defections and remain competitive.

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