AIG - they broke it, we bought it.

There's a lot of justified outrage about the AIG bonuses. And one man arguing that they are needed. (And here's a rebuttal by Cindy Casella)

It's very hard to support the bonuses. Let's see the contracts. If they are non-legit, like Madoff transferring all his assets to his wife, lets throw the book at them. If they are backdated, if a legal clause doesn't have a period in the right place, refute it.

But, if they are legit, I think we are stuck paying the bonuses. Cause we are a nation of laws.

As Sorkin writes:

"If you think this economy is a mess now, imagine what it would look like if the business community started to worry that the government would start abrogating contracts left and right"

Casella argues that union contracts at Ford were rewritten, why not AIG? True. So were contracts at United and a host of others. But these contracts were years into the future. The bonuses were short term. Before the bonuses were due, when they had leverage, Treasury should have renegotiated. Somebody at Treasury doesn't deserve a bonus this year! And any future bonuses should be renegotiated. BTW, Treasure should immediately look at any other "Contractural" bonuses at all the other companies we own. So this never happens again.

Much as I really hate to say it, we should not break laws and "blow-up" AIG in a hissy fit. Cause, for better or worse, we own it. Sorkin is right. Look at it this way - if paying out $165 million in admittedly disgusting and undeserved bonuses helps preserve AIG "more" intact, or stabilizes markets by not retroactively trashing legitimate contracts, taxpayers will reap rewards since AIG will be worth more, and the economy will recover sooner. If pouring billions into stupid undeserved greedy risky bad loans is a good idea, so is pouring millions into AIG. This once.

Yes, this really leaves a bad taste in my mouth, and here's hoping that some "voluntary" pressure will work. And certainly, if there is any flaw in the bonus contracts, revoke them.

Some of the good news from all this is that AIG is not hoarding the money - they are paying billions out to other institutions. Which is good - the whole point is for them to keep the wheels of business rolling. I have no idea if they are paying the right people and how it will work, but at least we can't complain that they are sitting on the money like some banks were.