The whole reason we gave lots of money to AIG was that we didn’t want them to declare bankruptcy, and they didn’t have enough money to pay their obligations.
Among those obligations were contractual requirements to give obscene amounts of money to certain employees. These contracts went back well before this whole economic mess began to collapse upon our heads.
When companies go bankrupt, the courts can waive their contractual obligations. Not before that, though.
When it nationalizes a company, the government takes on its obligations. Following so far?
By giving AIG lots of money so that it could pay off the things it needed to without going bankrupt, we ensured that some of the money we gave would be given out in those employee bonuses. We didn’t forbid AIG from using the money for that. We didn’t set up preconditions and requirements that AIG had to abide by. We didn’t have the courts nullify the contracts, or try to get the employees to release AIG from its accepted responsibilities. We didn’t even insist that it only pay back its American creditors (as some have complained that much of the money has gone to various European banks). We just gave it the money.
And now every fool in America is squealing.
Most offensive of all: I listened to a “Fresh Air” interview (with Terry Gross) of some woman claiming to be a financial expert. This ‘expert’ claimed that she couldn’t grasp why AIG was insisting that it was contractually obligated to pay these bonuses when we’d previously persuaded banks to renegotiate many of the mortgage agreements they’d made.
Because the banks were the ones being owned money, of course. Anyone can waive something that they’re contractually entitled to. It’s the person who owes who can’t get out of it simply by deciding.
The entire interview was nothing more than waving a red flag at the listeners and informing them of the talking points they should be repeating when they talk about why they’re supposedly outraged.