The Treasury is pressing American International Group Inc. to reduce $198 million in scheduled retention payments as company and government officials keep wrangling over pay packages that set off a political firestorm this year.

A report from the special inspector general for the government's $700 billion financial rescue plan said the Obama administration's pay czar has told AIG management that the retention payments for its financial products division should be reduced. Kenneth Feinberg, the Treasury's special master for executive compensation, has not told AIG management what figure would be acceptable, the report said.

A decision on the scheduled retention payments is affecting efforts to recoup roughly $45 million in retention payments made to AIG employees in March. The report by Special Inspector General Neil Barofsky said that $19 million, or less than half, of $45 million in pledged repayments had been received by the end of August.

Company officials told investigators that getting the additional $26 million could hinge on how Feinberg and AIG negotiate the second set of payments.

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