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The legal argument for honoring these ill-considered contracts is that a deal is a deal and that trying to abrogate them will only wind up costing the government even more in legal fees and punitive damages. But that doesn’t mean the government and its handpicked new management team at AIG were powerless to renegotiate those contracts long before last weekend’s deadline.
After all, if the government hadn’t stepped in, AIG would have gone bankrupt and those whiz-bang traders could have lined up with all the other unsecured creditors at the bankruptcy court to see how much money they might receive three or four years down the road. And the government could still put the company into bankruptcy anytime it chooses.
Moreover, the Justice Department would surely have been within its rights to launch an extensive civil and criminal investigation into whether those bonuses were granted as part of an ongoing conspiracy to defraud shareholders — a conspiracy in which the traders were knowing participants. As part of that investigation, prosecutors could have also prepared a public report to the Treasury, the Federal Reserve and Congress listing the names and home addresses of all the traders who were slated to receive the bonuses, along with a detailed description of their role in creating the mess that brought down the company. There could even be a chart listing their salaries, bonuses and other perks over the past decade.
More from Ken Silverstein:
Commentary — November 17, 2015, 6:41 pm
The Clintons’ so-called charitable enterprise has served as a vehicle to launder money and to enrich family friends.
Estimated number of people who watched a live Webcast of a hair transplant last fall:
A rancher in Texas was developing a system that will permit hunters to kill animals by remote control via a website.
A man in Japan was arrested for stealing a prospective employer’s wallet during a job interview, and a court in Germany ruled that it is safe for a woman with breast implants to be a police officer.
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"It is an interesting and somewhat macabre parlor game to play at a large gathering of one’s acquaintances: to speculate who in a showdown would go Nazi. By now, I think I know. I have gone through the experience many times—in Germany, in Austria, and in France. I have come to know the types: the born Nazis, the Nazis whom democracy itself has created, the certain-to-be fellow-travelers. And I also know those who never, under any conceivable circumstances, would become Nazis."