AIG insists that it has no choice but to give out huge bonuses to the folks who drove it right off a cliff. Besides contractual obligations, it has to retain the “best and the brightest” (I didn’t make that up) to assist it in clearing out the wreckage caused by the best and the brightest. Apparently the Treasury Department agrees.
I have only my wife as a witness, but when I first read the article, my reaction was that such bonuses, as well as a lot of the other absurdities of this particular bailout, ably explained here by Gretchen Morgenstern (who is, in my opinion, a fantastic reporter), could be avoided by putting this bankrupt business into bankruptcy, where these “contractual obligations” could be shed as quick as lightning. In addition, AIG’s counterparties would have to come forward and would get compensated rationally, if at all. It seems pretty clear that a bankruptcy judge would do a better job protecting the taxpayer’s investment than the Bush Administration did, or the Obama Administration is doing .
Atrios, who can speak with more authority than I on economic issues, apparently sees things the same way.
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