Perhaps one of the reasons why the administration didn’t think they could challenge the bonuses in the first place?

From the Guardian…

The company said it was legally obliged to pay traders $165m (£118m) in “guaranteed” bonuses, despite the near collapse of the insurer last September and its subsequent $173bn bailout by US taxpayers. Staff at the company’s offices in London – many of them in the financial products division identified as the root cause of its downfall – are included in the payout.

In an effort to quell a mounting furore, the Treasury Department said late last night that it would require AIG to repay the government more than $165 million in bonuses doled out last week.

In a letter to congressional leaders, Treasury secretary Timothy Geithner said the money would be deducted from the government’s latest $30 billion infusion of bailout funds to the insurance giant at the centre of the nation’s deepening financial crisis.

Geithner also said future bonuses would be subject to tough new limits now being developed for crippled companies getting rescued with taxpayers’ money.

Personally, I understand and sympathize with the populist rage, and I do think AIG should pay back the money, but this bonus situation is sucking the oxygen out of the debate and distracting from some REALLY big problems.

Hopefully we can move past it quickly and get focused on the budget, health care, etc.

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