So now the government wants to get back the more than $165 million in bonuses that AIG paid its executives. Hmm.
AIG, in case you've been dead since last year, is the insurance company that the government now owns 80 percent of due to more than $170 billion (yes, billion) in bailout money that taxpayers have put into the firm to keep it from collapsing.
Today's New York Times has an excellent piece written by George Washington University law professor Lawrence Cunningham that explains all the legal ways AIG or the government could use to justify getting the money back. My question, though, is what would the government do with the cash once it has it back?
By all indications, the more than $1 trillion in taxpayers dollars already spent or allocated for company bailouts or economic stimulus so far haven't fixed the fundamental problems in the economy: a housing market that completely tanked and lending by banks to companies and consumers to keep the economy moving. Why not take the cash from the bonuses AIG paid and put it toward fixing those problems directly? The FDIC, for example, has already shut down or taken over more banks in the last 15 months than it has in decades. $165 million sounds like it would go a long way toward recapitalizing at least a few of them, no? How many home mortgages could be made at affordable rates would that kind of cash? How many entrepreneurs could use $165 grand, let alone $165 million, to help make a payroll or get a new product into production?