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Obama To Aig: Nuh-uh


The Times has his comments here, though it notes that:

White House officials said that the administration is not looking to take A.I.G. to court to stop the company from paying out the bonuses. But they said the Treasury Department would be trying to figure out what they can do to block A.I.G. from making the payments within the legal confines of A.I.G.’s contractual obligations to the executives.

Question: If we (i.e., the government) did take AIG to court, is there a way we could get out of paying their legal fees?

Update: In its write-up of the attempts by the administration and New York Attorney General Andrew Cuomo to halt the bonus payments, the Wall Street Journal adds this:

Cuomo said he's looking into whether any of the individuals receiving payments were involved in conduct that led to the insurer's near collapse; whether the contracts may be unenforceable for fraud or other reasons; and whether the payments may be consider fraudulent conveyances under state law.

Fraud seems like a longshot to me, given that the apparent point of the bonuses was to compensate people who were going to lose money under their traditional, performance-based incentives. That is, it wasn't a case of people making their numbers look better than they were to secure large bonuses. It sounds like the bonuses were designed to replace the bonuses people would have gotten had their numbers looked better.

--Noam Scheiber