Ten Thoughts On Aig

1. If I worked at AIG, I'd be ashamed to take a bonus, and I am dismayed that anybody there could feel otherwise.

2. The evidence is accumulating that the Obama administration has been much, much less than candid about its AIG decision-making. In particular: for the president to argue that Tim Geithner did not "draft" the bonus clauses in the AIG deal is disingenuous. Of course he did not draft them. Nor did he sweep up the room afterward. He was head of the New York Fed! But he did sign them, so he is responsible.

3. The Obama administration's defense of these bonuses makes things worse. They seem to be representing the AIG bonus-takers as successful blackmailers: We had to agree to pay them or else they would blow up the world economy. That's not a very appealing argument - and it is not an exactly reassuring signal about how the Obama administration would respond to actual terrorists or actual blackmailers.

4. All that said: a contract is a contract - and a contract signed by the US government is something more than an ordinary contract. There can be no reneging.

5. The only thing worse than contract-breaking by the US government would be an attempt by Congress to impose special onerous taxes on a small, discrete group of unpopular people. If that's not unconstitutional, it ought to be.

6. In this matter, Congress has behaved in ways that are simultaneously hysterical, thuggish, and deeply hypocritical. Barney Frank's demand for the release of the names of bonused employees is the lowest, an open invitation to lynch law.

7 Some AIG employees have already voluntarily surrendered their bonuses. When will members of Congress voluntarily return their AIG campaign contributions? And what about you, President Obama?

8. From the start, AIG has been handled with a shocking lack of transparency. Why did it take so many months to identify the counterparties who are receiving taxpayer money via AIG?

9. The role of Goldman Sachs in all this is especially troubling and mysterious. Much more than the names of the bonused AIG employees, I'd like to know the name of the Goldman PR person who persuaded Reuters to report that Goldman was receiving none of the AIG money when in fact it received more than anyone.

10. I fear, I truly fear, that AIG may mark an ideological turning point in American history, a moment that marks the beginning of a sharp turn toward more regulation, more statism, and more populist anti-business feeling. Bitterly ironically, it will be the people who did most to provoke today's outrage whose party will benefit most from it.