Tuesday, March 17, 2009

Unsolicited Advice about the AIG Bonuses

Here's some unsolicited advice to the Obama administration about the AIG bonuses:

Whereas, if a company goes bankrupt, then it need not and often cannot honor its contracts, especially those for bonuses,

And, the only reason AIG did not go bankrupt is that we the people, in the form of the Federal government, bailed them out,

Therefore, AIG is in quasi-state of bankruptcy, and need not honor its contracts for payment of bonuses, especially if the government says they should not.

The upshot (to get back into more modern parlance) - contrary to what Larry Summers said over the weekend, the bonus contracts need not and should not be honored. Since our government has already given AIG the money, our government should sue AIG - take them to court - to compel AIG not to let the bonuses stand (if AIG can't recoup the money from the bonus payees, then AIG should return an equivalent amount of money to the government).

Let the case go to the Supreme Court, if necessary, where Republicans and Democrats are well represented.
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