By DAVID STOUT

Published: March 18, 2009

WASHINGTON - As the lucrative bonuses paid to employees of the American International Group fueled fresh outrage at the White House and on Capitol Hill on Wednesday, the embattled chief executive of A.I.G. said that he had asked some recipients to give at least half the money back.

The chief executive, Edward M. Liddy, made the announcement during his testimony on Wednesday afternoon before a Congressional committee investigating the problems at the insurance giant.
"I have asked the employees of A.I.G. Financial Products to step up and do the right thing," Mr. Liddy told lawmakers. "Specifically, I have asked those who received retention payments of $100,000 or more to return at least half of those payments."

The A.I.G. chief said that some recipients had already offered to give up all of their bonuses, and he added later that he expected to get most of the money back. Of the 418 employees who received bonuses, 298 got more than $100,000, according to the New York attorney general, Andrew M. Cuomo. The highest bonus was $6.4 million, and 6 other employees received more than $4 million. Fifteen other people received bonuses of more than $2 million and 51 received $1 million to $2 million.In response to Mr. Liddy's offer, Mr. Cuomo said in a statement that it was too little, too late. "Rather than take half-measures, A.I.G. should immediately turn over the list, which we have subpoenaed, of who got what and when," Mr. Cuomo said.

Before Mr. Liddy's testimony, the A.I.G. affair prompted President Obama to declare that a culture of "excess greed" demonstrated in A.I.G.'s dealings should have no place in a new Wall Street.

"As we get out of this crisis, as we work toward getting ourselves out of this recession, I hope that Wall Street and the marketplace don't think that we can return to business as usual," the president said after meeting with his economic advisers.

Accordingly, Mr. Obama said, he will push for quick Congressional legislation to create a regulatory framework for entities like A.I.G., which is not a bank, similar to the powers that the Federal Deposit Insurance Corporation has over banks."I'm angry," the president said. "What I want us to do, though, is channel our anger in a constructive way."

The president reiterated his faith in Treasury Secretary Timothy F. Geithner. "No Treasury secretary since maybe Alexander Hamilton has faced such challenges," he said. Mr. Obama has already called for Mr. Geithner to explore whatever legal means might be available to retrieve the bonuses. The president and his aides have also noted often that the near-collapse of A.I.G. and other aspects of the financial crisis began to manifest themselves before the start of the Obama administration.

The president did not call on Wednesday for the bonuses to be paid back, or taken back somehow. But there was strong sentiment on Capitol Hill over the $165 million in bonuses, and it was by no means clear that asking bonus recipients to give up half of their windfalls would appease the lawmakers. A.I.G. has received nearly $200 billion in federal bailout funds. By late afternoon, several legislative proposals to recoup the bonuses were being discussed in the Capitol, although their prospects were not clear.

"We are the effective owners of this company," said Representative Barney Frank of Massachusetts, the chairman of the House Financial Services Committee, going on to suggest a lawsuit to recover the $165 million in bonuses. "I think it's worth trying."

By "we," Mr. Frank made clear, he meant the American taxpayers, whose collective anger has been felt on Capitol Hill over the last several days. A

nd no wonder, said Representative Gary L. Ackerman, a Democrat from Long Island. The typical taxpayer knows he is "the ultimate sucker" in the A.I.G. debacle, Mr. Ackerman said.

The lawmakers, having heard from their furious constituents, seemed unwilling to be mollified by the pledge from Mr. Liddy, who took the helm at A.I.G. last fall after it had begun imploding because of reckless investments, that the company's 116,000 employees were united in wanting to work out of the morass, and work "shoulder to shoulder" with federal regulators.

Instead, the lawmakers were focused on the recipients of bonuses at the very unit that caused A.I.G. "to teeter on the brink of collapse," as Representative Paul E. Kanjorski, the Pennsylvania Democrat who heads the capital markets subcommittee, put it.

"A million dollars is a sizable sum to the typical American family," Mr. Kanjorski said, "and a million dollars is a lottery prize for anyone who has just lost a job." He called on A.I.G.'s employees to join with the legions of Americans who "have made personal sacrifices to survive these difficult times."

For the American people, said Representative Paul Hodes, Democrat of New Hampshire, the initials "A.I.G." now stand for "arrogance, incompetence and greed."

But Representative Scott Garrett of New Jersey, the senior Republican on Mr. Kanjorski's subcommittee, said he had a question for those who were unhappy with the way the A.I.G. story had unfolded: "What did you expect, and why weren't you asking more questions before?"

The big scandal is not the millions in bonuses but the billions going to try and save A.I.G. in the first place, he said. "And to what effect?"

It was clear even before the start of the hearing that there was the potential for emotional outbursts from the audience, enough potential that Mr. Frank warned at the outset that there would be "no heckling," and that he would have people arrested, if necessary.

A few hours later, Mr. Kanjorski said a group of protesters in the audience had exhausted his patience. He directed Capitol police officers to confiscate the protesters' signs, which the police did without incident.Representative Spencer Bachus of Alabama, the leading Republican on the Financial Services Committee, urged his colleagues not to be distracted by what he said should be their true goal, "trying to recover as much taxpayers' money as possible."

Mr. Bachus said Congress should feel some responsibility for the mess, given an apparent failure to regulate adequately in recent years. "The American people are paying for it," he said. But for the moment, the focus was on the 418 so far unnamed recipients of the bonuses, paid out after A.I.G. received $170 billion in public money.Mr. Frank threatened to issue subpoenas, if necessary, to make public the names of the bonus recipients.

"Morally reprehensible," Representative Carolyn B. Maloney, Democrat of New York, called the bonuses. No one disagreed.Nor did anyone disagree with Mr. Liddy when he said A.I.G. had made mistakes "on a scale few could have ever imagined possible."

"The most critical of those mistakes was that the company strayed from its core competencies in the insurance business," Mr. Liddy said. "Those missteps have exacted a very high price, not only for A.I.G. but for America's taxpayers, the federal government's finances and the economy as a whole."

"We are meeting today at a high point of public anger," said Mr. Liddy, a former chief executive of Allstate who was installed as A.I.G.'s chief when the Federal Reserve announced its rescue package. "I share that anger. As a businessman of some 37 years, I have seen the good side of capitalism. Over the last few months, in reviewing how A.I.G. had been run in prior years, I have also seen evidence of its bad side."