Look, you guys, you have to make up your minds.
AIG was bailed out because they're a GIGANTIC insurance company and, if they defaulted on their contracts, it would be a lot like banks pulling a "Bernie Madoff" on their depositors (not their shareholders, who lost BIG) -- the tsunami wave in the banking/insurance biz would be devastating. "Confidence" in "contract" (which is just the legal name for a promise to do something) would be undermined in a very big way. And we all know that restoring "confidence" is what nearly everybody has been talking about as the economy has been heading south.
But here, the contracts they're "honoring" are those with the execs and former execs in their investment branch, that is, the very people who had a major hand in putting this whole economy in the ditch last September. So few people, including I, have much sympathy for the promises in those contracts. And it is true that, if AIG had filed for bankruptcy, they wouldn't be honored by the Bankruptcy Court.
Does this sound a little familiar? Because "restructuring" union contracts was one of the arguments for allowing GM and Chrysler to go down last December. They'd have to file for Chapter 11 Reorganization and all the "executory" (i.e., unfinished) contracts would be on the table for restructuring. The unions would have to take an involuntary "haircut."
But what about this idea of "the contract" as "sacrosanct?" If union contracts, and bonus contracts, should be rewritten, what about, for example, mortgage contracts? What about the "sanctity" of the insurance contracts which AIG was bailed out to save in the first place? (And yes, some of those "insureds" were foreign gov'ts.)