American International Group Inc. (AIG) is facing pressure from the U.S. Treasury Department to reduce $198 million in scheduled retention payments pledged to employees of its trading business unit, AIG Financial Products.

Kenneth Feinberg, the Treasury's special master for executive compensation and notable pay czar, is reviewing bonus payment deals cut before last year’s Troubled Asset Relief Program (TARP) rescue plan went into effect. Those deals set off public criticism of the carrier and its policies, in spite of the fact that they are considered pre-existing contracts. And it posed problems for the federal government, unable to wrangle free of the legal implications involved in such transactions.

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