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"People are angry about the bonuses, especially when they are given to people in the same division of the company that was responsible for the problems.

I agree with your statement about why people are mad, but people are mistaken to call these payments "bonuses".

AIG went to these specialist/executives/employees to get them to stay and try and reduce AIG's $2.6 TRILLION exposure on these derivative's insurance contracts. The employee did that. They reduced the exposure by $1.1 TRILLION dollars. AIG (with the approval of the NY Federal Reserve Bank, under the leadership of Tim Geitner) promised these employees X amount of dollars if they stayed and did what they were asked. These are legitimate payments on legitimate contracts. Period.

This law is IMHO unquestionably unconstitutional. We'll see if anyone sues - I'm guessing not because who wants to out themselves as a recipient of these bonuses and face the public backlash. Sadly, that very well may cement this precedent and allow the DEMS to target other companies or industries they disagree with - Can you hear me OIL EXECUTIVE, PHARMACEUTICAL EXECUTIVES, INSURANCE EXECUTIVES, GUN MANUFACTURES ETC. ETC. ETC???

I agree with you, but I would add:

The damage being done to "contract law" by this and the "cram-down" bill, that would allow judges to change the terms of a mortgage contract; is going to make everyone sorry. The rule of law in the form of contracts is a strong and necessary piece of doing business in America. I don't think anyone has really thought about what this is doing to contract law.

AIG went to these specialist/executives/employees to get them to stay and try and reduce AIG's $2.6 TRILLION exposure on these derivative's insurance contracts. The employee did that. They reduced the exposure by $1.1 TRILLION dollars. AIG (with the approval of the NY Federal Reserve Bank, under the leadership of Tim Geitner) promised these employees X amount of dollars if they stayed and did what they were asked. These are legitimate payments on legitimate contracts. Period.

ding, ding, ding, ...we have a winner.

These are the facts. The people who were given bonuses signed up to stay on in a part of AIG that was going away .. they could have departed for greener pastures. The jobs they took were dead end, no future other than pay and a retention bonus when the job is done or the term of the contract is over.

So, AIG pays $165 million to unwind $1.1 trillion in debt obligations ... sounds OK to me.