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.

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