Cuomo subpoenaed information from AIG on Monday to determine whether the payments made over the past weekend constitute fraud under state law. He says contracts written in March 2008 guaranteed employees 100 percent of their 2007 pay for 2008, regardless of their performance.
Seven of the executives received more than $4 million each and one got more than $6.4 million, reports CBS News correspondent Nancy Cordes.
But Congressional Democrats vowed Tuesday to all but strip AIG executives of their $165 million in bonuses as expressions of outrage swelled in Congress over eye-catching extra income for employees of a firm that has received billions in taxpayer bailout funds.
"Recipients of these bonuses will not be able to keep all of their money," declared Senate Majority Leader Harry Reid in an unusually strong threat delivered on the Senate floor.
"If you don't return it on your own, we will do it for you," said Chuck Schumer of New York.
Republicans said President Barack Obama and his administration should have leaned harder on AIG executives to reject the bonuses. The complaints sparked a low level hum about whether Treasury Secretary Timothy Geithner could or should survive this latest political storm.
"Where was the Secretary of the Treasury? Where was Treasury before this money was paid out," Alabama Sen. Richard Shelby asked Tuesday on CBS' The Early Show.
"It's a lot of money, $165 million, and a lot more is supposed to be paid out in the future. Why did Treasury not step in and let the American people know - try to block it," he asked rhetorically. "I don't know what President Obama knew about it. I'd say he probably didn't know about it. Timothy Geithner is the Secretary of the Treasury. He either knew or should have known about what was going on. Treasury's deeply involved in this bailout."
Shelby later said that he didn't know if Geithner "should resign over this."
"The secretary of Treasury did as much in his legal power at the time to lessen the impact of what we all understand is outrageous," Gibbs told reporters Tuesday.
Gibbs said President Obama has confidence in Geithner and underscored that Mr. Obama is working as quickly as possible with Congress toor recoup that money.
Obama himself avoided the issue today, reports CBS News chief White House correspondent Chip Reid, attending a series of St. Patrick's Day events. But Obama's approval rating remains high - 62 percent - according to a CBS News poll out tonight.
But, as CBS News chief legal analyst Andrew Cohen points out, there may not be much the government can do to stop the bonus payments.
"In a normal situation, a creditor (like the United States) might be able to run into court and argue that its debtor, AIG, is about to siphon off preferential money in advance of a bankruptcy.
"But of course the United States cannot argue that AIG is heading into bankruptcy at the same time our government agents are working so hard to convince everyone that the giant company has been sufficiently buttressed," Cohen writes.
Gibbs sought to put the focus on bigger reforms ahead.
He said Mr. Obama wants both financial regulation reform and a new "resolution authority" to deal with giants like AIG that get into complex financial trouble.
According to Cuomo, AIG mailed the bonus checks Friday.
Despite the fact that the company and some federal regulators have said it was obligated by contract to make the payments, Cuomo said the bonuses might have been fraudulent if AIG officials knew the company couldn't afford them.
"You could argue if the taxpayers didn't bail out AIG, those contracts wouldn't be worth the paper it's printed on," he said Monday.
There was no immediate AIG comment following Cuomo's disclosure Tuesday of the bonus amounts. Cuomo did not release the names of the recipients.
AIG spokeswoman Christina Pretto had said Monday the company was in contact with Cuomo's office and would respond to his requests for information and the subpoena.
In a letter Tuesday to Rep. Barney Frank, chairman of the House Committee on Financial Services, Cuomo outlined the bonus and contract information and asked the panel to take up the issue at a hearing scheduled for Wednesday.
"These payments were all made to individuals in the subsidiary whose performance led to crushing losses and the near failure of AIG," Cuomo wrote. "Thus, last week, AIG made more than 73 millionaires in the unit which lost so much money that it brought the firm to its knees, forcing a taxpayer bailout. Something is deeply wrong with this outcome."
According to the attorney general's office, the top individual bonus was more than $6.4 million, and the top seven received more than $4 million each.
Separately, Frank, D-Mass., said the government should assert its rights as the owner of about 80 percent of AIG and sue to recover the bonuses.
"The time has come to exercise our ownership rights. We own most of the company. And then say, as owner, 'No, I'm not paying you the bonus. You didn't perform. You didn't live up to this contract,"' Frank told reporters.
AIG would not be the only firm named by legislation in either the Senate or the House, but there was no question whose executives were the inspiration.
"They're not going to get the financial benefit of those bonuses," said Senate Finance Committee Chairman Max Baucus, D-Mont.
In the House, Reps. Steve Israel, D-N.Y., and Tim Ryan, D-Ohio, introduced a bill that would that would tax at 100 percent bonuses above $100,000 paid by companies that have received federal bailout money.
"We will use any means necessary," said Ryan. "It boggles my mind how these executives can be so unaware of what the American people are going through."
The Internal Revenue Service currently withholds 25 percent from bonuses less than $1 million and 35 percent for bonuses more than $1 million.
But it unclear whether any new tax law so narrowly targeted at a single group would hold up in court, Cordes reports.
Nevertheless, another proposal, taxing the bonuses at 70 percent - with 35 percent paid by the bonus recipient and 35 percent paid by AIG - is making its way through Congress, Cordes reports.
AIG also was raked over the coals at a banking committee hearing on regulating the insurance industry.
"One way or another, we're going to try to figure out how to get these resources back," said Christopher Dodd, D-Conn., the panel's chairman.
"This is ridiculous," exclaimed Sen. Jon Tester, D-Mont. He said AIG executives "need to understand that the only reason they even have a job is because of the taxpayers."
Liddy is to testify Wednesday before a House subcommittee.
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