It seems there is a hunt for a scapegoat and AIG is it. Their bonuses are a matter of contractual law and go to reward the highly skilled experts to keep them at AIG and keep them from leaving for another firm.
And to those who say they aren't worth the bonuses if they got the company in such trouble, those folks are missing the point.
Excess & greed, not lack of skill, got them to this point.
Leave AIG's bonuses alone.
It's a legitimate cost of keeping the business in good running condition.
You seem to be placing an emphasis on the merit or the skills of these people, and not their actual value or performance that they bring to a firm.
If these experts were so brilliant why does AIG have to beg the US government for bailouts? Didn't the experts see the monster that was the sub-prime?
I don't know what business you would run, but I would not have contracts that reward mediocrity, and incompetence.
Secondly it was a lack of skill and excessive greed that got AIG into that position in the first place. Skill and greed are required to be successful in a capitalist system, greed by itself always ends in dramatic failure.
Where was the consulting skills of the 'experts'? Where was the analytical skills of the 'experts'? Why didn't they have the skills to predict that the Fed Reserve's monetary policy combined with governmental policy created a huge inflation of the money supply and a speculative bubble (respectively)? These so called experts are hacks.... Not worth the value that you give to them.
Thirdly you seem to be treating contractual law as if it lives in a world completely separate from the private sphere. Many of the concepts of contractual law developed in the 1800's when the UK and America experienced the greatest period of laissez faire development. There was very little government intervention in the private dealings of individuals and businesses. Thus the maximums and doctrines reflect this environment.
I'll put it this way, if government is willing to interfere with the workings of businesses, and businesses are willing to except these handouts; how can you then suggest that government respect contractual rights of parties? Laissez faire is not a compartmentalized concept. So if companies don't want their contractual rights interfered with, then they shouldn't except government bailouts.
You can't have it both ways. Consequently, this defence of AIG based on contractual law, ignores the reality that AIG doesn't actually believe in laissez faire principles, but rather is quite willing to beg for handouts when it fails.
Why should we allow men to have freedom to profit and freedom of contract if we do not hold them accountable to the inherent risks of their freedom? Capitalism becomes meaningless if we cannot differentiate between losses and profit.
Secondly, if governments bailout failing corporations, then governments should have every right to obliterate any private law obligations that the corporation has. As I've said, you can't have it both ways......