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How AIG defends its bonuses
CEO Edward Liddy makes his case before an angry Congress
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IG CEO Edward Liddy did his best to “blunt the outpouring of criticism” over $165 million in retention bonuses, said Joseph Weber in BusinessWeek online. He told an angry House committee that the “distasteful” bonuses were legally binding and necessary to keep on employees who can unwind the company's $1.6 trillion in dangerous securities. Some executives have agreed to return the bonuses, he said, and some are receiving threats of death by piano wire.

The bonuses are clearly “ridiculous,” said David Gaffen in The Wall Street Journal online, and the “retention” aspect is questionable—11 of the employees who got $1 million or more in bonuses have already left AIG. But Liddy is probably right that there are very few outsiders able or willing to wind down AIG’s massive portfolio.

So we’re paying the “sharpies in London and Connecticut” to stay, said Steven Pearlstein in The Washington Post, in order that they don't use their insider knowledge to bet against AIG? Liddy isn’t the only one on Wall Street who doesn’t get that “it’s no longer business as usual,” but his fecklessness has put the “entire financial rescue effort in political jeopardy.”

“Edward Liddy is no G. Gordon Liddy,” said Daniel Gross in Slate, and blaming him for the AIG bonuses is like blaming Gerald Ford for Watergate. If Congress wants answers, it should refocus its “misplaced anger” and haul in former CEOs Hank Greenberg and Martin Sullivan, or the banks and hedge funds that taxpayers indirectly bailed out through AIG.

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