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Argument: AIG bonuses reward those responsible for collapse

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Supporting quotations

"OUR VIEW: Bonus fiasco a slam dunk for outrage against AIG". Star Exponent. March 25, 2009 - "Bonuses are supposed to reward superb performance. Since when is losing money a good thing?"


Ben W. Heineman, Jr. "AIG's Bonuses: A Dangerous Failure of Leadership". Harvard Business Publishing. March 19, 2009 - What possible reasons could there be to pay bonuses to the very people whose greed and misjudgments created untold liabilities in AIG's credit default swap portfolio that brought down the company--leading to 80 percent government ownership, an injection of $170 billion in taxpayer dollars and a recently announced $60 plus billion quarterly loss?

[...]Moreover, countless legal experts have already suggested numerous reasons why it is likely that there is no ironclad legal obligation to pay the bonuses to the people who caused the problem. These range from legal theories about non-performance to equitable theories of recission or reformation due to fraud or unconscionable terms to the doctrine that governmental take-over excuses bonus payment because the point of the contract has been destroyed.

[...]If a senior AIG Financial Products Group officer had murdered an employee on the trading floor, would they get the bonus? Of course not. Should the result be different if that person killed the company. Surely the law is not such an ass--and surely it is appropriate, on the likely assumption of a credible theory justifying non-payment, to put the burden on the senior employees to get a court to order payment of bonuses from a company they destroyed.


James P. Tuthill, a lawyer, is a lecturer at the law school at the University of California, Berkeley. "Those Contracts can Be Voided". New York Times Room for Debate. March 17, 2009 - Every first-year law student learns that a court can invalidate a contract’s “unconscionable” terms, rescind it or reform it. If these bonus contracts benefiting the very people who have destroyed incalculable amounts of wealth in the pursuit of their own personal greed don’t warrant revision, rescission or reformation, then our legal system is seriously deficient.

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