New York Attorney General Andrew Cuomo today launched a probe and threatened legal action if insurance giant American International Group did not immediately cease spending money on extravagant bonuses and trips while the company is being bailed out by federal taxpayers. Cuomo wrote a letter to AIG's board, saying that the company made extraordinary expenditures on lavish resorts and eight-figure bonuses for executives as AIG "slipped towards insolvency" in the past 12 months and that continuing such expenses would be "even more irresponsible and damaging."

He also demanded that the board quickly provide his office with an accounting of past executive compensation packages, junkets and perks at the company. He also urged that the board move to recover some of the excessive payments to former corporate executives and impose controls so it would review such proposed expenses in the future.

AIG spokesman Peter Tulupman said this afternoon that the board was being notified of the attorney general's concerns.

"On October 10, we issued a directive ending all activities that are not absolutely essential to the conduct of our business," Tulupman said in an e-mailed statement. "AIG's priority is to continue focusing on actions necessary to repay the Federal Reserve loan and emerge as a vital, ongoing business."