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Argument: AIG bonuses would not have been possible without bailout

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Supporting quotations

Robert Reich. "The Real Scandal of AIG". TPM. March 14, 2009 - "AIG's arguments are absurd on their face. Had AIG gone into chapter 11 bankruptcy or been liquidated, as it would have without government aid, no bonuses would ever be paid (they would have had a lower priority under bankruptcy law that AIG's debts to other creditors); indeed, AIG's executives would have long ago been on the street. And any mention of the word "talent" in the same sentence as "AIG" or "credit default swaps" would be laughable if laughing weren't already so expensive."


Andrew M. Cuomo, New York attorney general - "You could argue that if taxpayers hadn’t bailed out A.I.G., the contracts wouldn’t be worth the paper they were signed on."[1]


James P. Tuthill, 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 - The doctrines of rescission and reformation can also be used to challenge the bonus contracts. Under rescission, a contract can be voided because of misrepresentation or mistake, and under contract reformation, a court may equitably modify a contract where there are mistakes of fact or law. The bonus contracts that A.I.G. said were made last year must have been premised at least on maintaining A.I.G. as a shareholder-owned company. Thus they were premised on a mistaken fact and now can be revised.

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