CNN — White House officials and some members of Congress reacted strongly Sunday to news that insurance giant AIG had intended to pay out $165 million in bonuses and compensation. The company has received at least $170 billion in federal bailout money.

Under pressure from the Treasury, AIG scaled back the bonus plans and pledged to reduce 2009 bonuses — or “retention payments” — by at least 30 percent. That did little to temper outrage at the initial plan, however.

In a letter Sunday to Treasury Secretary Timothy Geithner, U.S. Sen. Russ Feingold urged the Obama administration to explore “legal options” to prevent the millions in AIG payouts.

“I write to ask why any bonuses would be legally required, given the company’s abysmal performance,” says Feingold, D-Wisconsin.

Feingold asked whether the bonuses could be canceled or recouped from recipients, and whether the administration will sue AIG executives for breaching their duties to shareholders

“There are a lot of terrible things that have happened in the last 18 months, but what’s happened at AIG is the most outrageous,” Lawrence Summers, head of the National Economic Council, told ABC’s “This Week.”

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