Obama Threatens To Re-Repay Taxpayers For AIG Bonuses

Interesting twist in Aigbonusgate: WSJ reports that Obama will force AIG to re-repay bailout funds for money that is spent on bonuses (which of course makes no sense at all):

It was unclear what legal options the government can pursue to stop the bonus payments. Monday afternoon, a White House official said the Treasury Department will use a planned $30 billion infusion into AIG to compel the company to repay the bonuses promised to employees of its financial-products group, which is responsible for selling the exotic financial instruments that brought the company to near-collapse.

This is getting worse than a surreal Escher painting. Instead of taking this route, why not just threaten to block the $30 billion payment completely? This would reduce the bonus issue to potential bonus recipients as follows: accept a bonus and be the cause for the shutdown of the most systematically important company (and thus create wanton fire and brimstone), or rescind a payment, be touted a humanistic hero and promote capitalism (for at least a few more days). This avoids the legal implications of suing and counter-suing bonus recipients.

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Breaking News Update from WSJ: AIG has told Cuomo's office that bonus payments were made on Friday, but did not disclose names. Basically: all discussion is now moot unless the bonuses can be clawed back somehow... Cuomo must be pissed.