US Treasury's Geithner: AIG must pay back bonuses

WASHINGTON, March 17 (Reuters) - U.S. Treasury Secretary Timothy Geithner on Tuesday said taxpayer bailout recipient AIG would be forced to pay the government to compensate taxpayers for $165 million in employee bonuses as a condition for receiving a further $30 billion in government funds.

"We will impose on AIG a contractual commitment to pay the Treasury from the operations of the company the amount of the retention awards just paid," Geithner said in a letter to congressional leaders.

He also said the Treasury would deduct $165 million from the already planned $30 billion increase in insurer American International Group's (AIG.N) federal bailout. (Reporting by Glenn Somerville and Tim Ahmann; Editing by Gary Hill)