New York  - New York state's attorney general has threatened legal action against financially troubled insurer AIG unless it takes steps to "review, rescind and recover all past unreasonable expenditures."

The move comes as US authorities are starting to investigate the behaviour of multiple financial companies in the wake of the ongoing financial crisis, according to media reports.

Washington Mutual, which would have likely gone bankrupt in September without the intervention of JP Morgan Chase, was specifically named as the target of an investigation.

In a letter to AIG's board of directors dated Wednesday, Attorney General Andrew Cuomo drew attention to the company's largesse even as it faced growing financial trouble.

In September, the US government took an 80-per-cent stake in the insurer to keep it afloat, at a cost of 123 billion dollars.

"The taxpayers of this country are now supporting AIG through rescue financing, which makes such expenditures even more irresponsible and damaging," Cuomo wrote, demanding the board review its past expenditures and try to recoup some money given away in perks and bonuses that Cuomo termed "unwarranted and outrageous."

"This office will seek appropriate sanctions and remedies if the board does not comply," the letter said.

It said charges would be pursued under fraudulent conveyance laws.

Cuomo's letter draws attention to several outlays he called over the top.

Those include: an executive allowed to keep 34 million dollars in bonuses and 1-million-dollar-a-month payments after his termination; a luxury retreat for AIG executives after the government's bail-out; and a large bonus to a retiring executive despite hints of oncoming financial problems.

In a letter posted Tuesday at the Securities Exchange Commission, a major AIG shareholder called on the firm to renegotiate its deal with the government, arguing that thousands of jobs and millions of shareholders' investments are likely to be lost if the company is forced to sell profitable assets at reduced prices. (dpa)