WASHINGTON – American International Group is in financial straits because of "recklessness and greed" and said he intends to stop it from paying out millions in executive bonuses.declared Monday that insurance giant
"It's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay," Obama said at the outset of an appearance to announce help for small businesses hurt by the deep recession.
"How do they justify this outrage to the taxpayers who are keeping the company afloat," the president said.
Sorry, Mr. President. I don't think your moral outrage will trump a binding contract in court. C'mon, you went to Harvard Law. You should know this. Larry Summers knows it. Why don't you?
While AIG royally screwed the pooch, there's nothing the government can do now to rewrite contracts between AIG and its employees that existed at the time President Bush bestowed the first bailout on them. I get why politicians are upset, but most of them should've thought of this before the federal government wrote the first check. Or the second check. Or the third check.
Certainly they're free to make the nullification of these types of bonuses a contingency for future assistance, but they can't expect a mulligan now that they realize they should've done things differently.