A wave of popular anger over the $165 million (£118 million) in bonuses received by executives of American International Group (AIG) is threatening to engulf the insurance company and cause deep damage to President Obama’s infant Administration.

Armed guards have been stationed outside the Connecticut offices of AIG Financial Products (AIGFP), where death threats have been pouring in and some employees have resigned or have refused to turn up for work.

Yesterday it emerged that 11 AIG workers who had received retention bonuses of $1 million or more had already left the company, stoking the anger on Capitol Hill, where Congress was threatening to introduce taxes to claw back the $165 million bonus payment to 400 staff at the division that caused its near-collapse.

Senators Max Baucus and Chuck Grassley, the Democratic chairman and the top Republican on the Senate Finance Committee, proposed a 70 per cent tax on bonuses for executives at companies that received money from the $700 billion financial bailout package, which is designed to target AIG.

Democratic senators have vowed to pass legislation within 24 hours taxing the bonuses at 91 per cent. In the House of Representatives, Democrats introduced a bill to tax at 100 per cent bonuses of more than $100,000 granted by companies propped up by taxpayers.

The Internal Revenue Service taxes bonuses of less than $1 million at 25 per cent and those of more than $1 million at 35 per cent.

Last night it emerged that Senator Chris Dodd, who is proposing the AIG bonuses tax, took a $100,000 donation from the insurer for his election campaign.

Andrew Cuomo, New York’s attorney-general, has used subpoenas to discover that the company paid bonuses of $1 million or more to 73 executives, who stayed at AIG to help it to unwind its $1,600 billion portfolio of credit default swaps. Of these 73, 11 have already left. In a letter yesterday, Mr Cuomo said that the 11 workers who had left the company included one individual who received a $4.6 million payment. He wrote to Barney Frank, the chairman of the House Committee on Financial Services, to say that seven had received more than $4 million each — a larger amount than the stricken insurer had previously indicated — while the top ten were paid a combined $42 million.

“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,” he wrote. “Something is deeply wrong with this outcome. I hope the committee will address it head on.” He said that it was unclear when or how they left the company or why the bonuses were paid. AIG declined to comment.

Edward Liddy, who was appointed chairman and chief executive last September after AIG’s first government bailout, is due to appear before Mr Frank’s committee today.

Responding to requests last week by Timothy Geithner, the Treasury Secretary, to halt or cut the bonuses, Mr Liddy said that AIG was powerless to change the bonuses, which were part of a $450 million compensation pool set aside in early 2008 before it received government assistance. AIG told Mr Cuomo that the money had been distributed last Friday.

Pressure is growing on Mr Geithner. Mr Obama’s spokesman was forced to say that the President had complete confidence in his Treasury Secretary.

Mr Grassley went several steps further in expressing his anger: “The first thing that would make me feel a little better toward them [would be] if they’d follow the Japanese example and come before the American people and take that deep bow and say ‘I’m sorry’ and then either do one of two things; resign or go commit suicide.”

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive