The "Geithner plan" to have AIG "repay" these bonuses does no such thing. The "plan" is to "recover" an amount equal to the bonus money (which despite what is commonly said is closer to 500 million than it is to 165 million) by withholding it from the next 30 billion dollar check. So instead of taxpayers ponying up $30,000,000,000.00, they'll only have to pony up $29,835,000,000.00. In the meantime, the people who made off with these bonuses will get to keep them. And there's the rub.

It isn't so much the amount of money involved as it is the fact that these people received "bonuses" at all. That never should have happened.

AIG can go jump. And Geithner and every other "came from Wall Street" type that is in this admin and has been part of this mess should join them. Not only should Geithner and the other Goldman-Sachs alums be fired, but in the future there should be an absolute ban on anyone from Wall Street holding a position in government until they have been away from Wall Street (or Citi or Merrill, etc.) for a minimum of five to ten years.

One more thing: For people who are all hung up on "the sanctity of contracts", my answer is that you have been well trained. Contracts are not sacred. Just ask the UAW. Or ask any other employee of any other company that has gone bankrupt. AIG is bankrupt. Taxpayers are paying their bills (which just means that money is being funneled through AIGFP to Goldman, Merrill, etc.) and should not be subjected to the obscenity of being forced to pay "bonuses" to these "Masters of the Universe" that are responsible at least in part for the mess we are in today.

We own AIG. Spin off the solvent insurance business and put AIGFP into bankruptcy/receivership. No more taxpayer dollars. Let the bonus babies get in line at the bankruptcy court for their bit of the rotting carcas. ENOUGH!

The imminence of the bonus payments is not the issue, or even a issue. The fact of the payments and the FACT that Treasury had insisted on language in legislation which would allow such payments is THE issue.

Treasury (and therefore the Obama admin) knew what they were doing the second they pushed Chris Dodd into making changes to the legislation to allow for such bonus payments. If the timing caught them off guard, well, so what? The takeaway is that they not only knew, they made it possible.

Geithner must go. In fact, everyone in the Obama admin who is an alum of Goldman, Merrill, Citi or any other Wall Street or banking industry giant that is in line to get taxpayer money must go. If we need bankers, get bankers...as in real bankers from small and mid sized banks that operate on nothing more than a regional basis. The "Masters of the Universe" we have now have proven themselves to be clowns.

Quote: Citing the lack of regulatory authority over a financial institution the size and complexity of AIG, Geithner began to answer: "We did not have the ability to selectively impose losses on their counterparties..."

Last I looked, AIG was effectively bankrupt until the US government rode to the rescue using taxpayer's wallets to pave the way. If GS had CDS contracts against securities they actually owned (and therefore had some sort of actual insurable interest in), that's one thing. But if GS had merely been placing bets via CDS instruments (unregulated gambling is what it is) that this whole MBS/ABS/CDO/SIV mess was going to blow up, that's another thing entirely.**

So...regulatory authority my...donkey. This is taxpayer money we are talking about here.

**If GS or others wanted to then sue the US government for not paying off the unbacked gambling debts of a bankrupt company, we should have let 'em go right ahead. $12,900,000,000.00 will pay for a LOT of litigation. Actually, now that I think about it, GS wouldn't have a claim against the US government...because although the government now effectively owns AIG (or 80 percent of it), stockholders in a corporation (which is what the government is in this case) are not liable for the debts of that corporation.

Quote: "Where in the Constitution is the Treasury given the authority do everything it has done since last March?"

Geithner seemed a bit perplexed. "We operate under the authority given to us by Congress."

Great! Congress gave them the authority. Congress should revoke it. NOW!

You wrote "were AIG to force it's counterparties to 'take a haircut' then the bond ratings on any of these insurance guarantees would immediately drop down below AAA levels and thousands of bonds would be required to be dumped by pension plans, investments groups, etc. that only hold the top-grade bonds."

Here's my question: Since AIGFP was in the biz of selling CDS contracts, and since CDS contracts don't require the buyer to actually have any ownership or otherwise insurable interest in the instruments for which they are seeking CDS, what exactly is your evidence that in the case of, say GS, that forcing a haircut would have any effect on bonds they don't own what so ever?