Several more employees are leaving the controversial financial products unit that brought American International Group Inc to its knees last year, according to a person with knowledge of developments there.

The resignations are in addition to the handful of senior AIG Financial Products executives who have already given notice, said the person, who could not quantify the total number of departures.

To date, AIG said the situation at the financial products unit remains manageable, despite the departures. But if too many employees quit, Chief Executive Edward Liddy has warned it could be disastrous for AIG and, ultimately, for U.S. taxpayers who are the insurer's majority owners.

The financial products division incurred heavy mark-to- market losses on credit default swaps, a type of derivative that guarantees underlying debt against default, after the downturn in the U.S. housing market, leaving AIG so severely short of cash the U.S. government had to step in with a rescue that has since grown as large as $180 billion.

The credit default business was only a part of the financial products division, which is being shut down.

Employees there were promised retention payments more than a year ago, on condition they stayed long enough to wind down their areas of business, effectively working themselves out of a job.

But now some have changed their minds, fed up after 10 days of ridicule and scorn from lawmakers who broadly derided the bonuses, demonstrators picketing outside AIG offices and a threat by New York Attorney General Andrew Cuomo to publicly name anyone who did not return the bonuses.

The employees still working are not the ones who caused the large losses and are being unfairly persecuted by elected officials, wrote Jake DeSantis, an executive vice-president for the Wilton, Connecticut-based financial products unit, in a resignation letter printed by the New York Times on Wednesday.

DeSantis said in the letter announcing his intention to quit the company after 11 years that many employees felt betrayed AIG asked them to give back the bonuses after numerous assurances the payments would be honored, and made no mention of revisions to pay and bonus agreements before the matter became a maelstrom on Capitol Hill.

Chief Executive Edward Liddy deeply appreciates the frustration expressed in this letter and believes that the recent vilification and harassment of AIG employees is grossly unfair and unwarranted, said an AIG spokeswoman.

Liddy, appointed to run AIG after it received the federal bailout last September, last week told a Congressional subcommittee the reason the company paid to retain employees was to prevent an uncontrolled collapse of that business, which still has $1.6 trillion in trading positions to unwind before it can close its doors.

The financial downside for taxpayers is potentially very large and it's very real. And that's why we're winding down that business as quickly as possible, he said, adding that to prevent undue risk exposure in the meantime, AIG has made a set of retention payments to employees.

As of last month, the financial products unit employed about 370 people at offices in Connecticut, London, Paris, Hong Kong, Tokyo and in India.

(Editing by Andre Grenon)