The whole ruckus concerning AIG bonuses to employees could have been avoided completely if the federal government would have taken some Hayekian knowledge (I know, utterly impossible) and not dumped billions of taxpayer dollars into AIG in the first place. I posted the folly of using taxpayer funds to prop up failing private institutions here, here and here. But whether its the auto companies, investment banks or insurance companies, executives of these corporations are learning the hard way (this is not a bad thing) that receiving funds from the federal government doesn't come without strings attached; politicians will use every possible political angle to make themselves while publically whipping the corporations that they are attempting to "save" in the first place. Simply, the government should never have offered to "save" AIG and AIG should have done the noble deed and filed for bankruptcy. But nooooo..."they're too big too fail." The American public was told that if AIG fails, then a horrid domino effect will take the entire U.S. financial sector down with it--what a bunch of crap. Like the last two stimulus packages, Americans fell for it hook, line and sinker.
BTW, wouldn't it be just grand if we didn't have to be subjected to the bloated rhetoric of Austan Goolsbee.