SB, I was watching several lawyers discuss the legal aspects of this so called contractual obligation claim by AIG to pay out these bonuses.

According to these lawyers the bailout money was money given that is supposed to be paid back by AIG. A government loan. So in a sense, the federal government has become a creditor to AIG. AIG now has an obligation to pay back the federal government. Being that they have an obligation to pay back the money given to them by the federal government, it is possible that a legal case can be made asking that contracts to pay executive bonuses be rendered worthless. There is even a good possibility that the payments made to executives thus far could even be declared invalid as a fraudulent attempt to evade payment obligations to the creditor aka the federal government.

Then they explained, looking at it from AIG's side, that AIG has every right to persue every legal business strategy to challenge any attempt by the government to have them cease paying out any more bonuses.

In a nutshell, the point that these lawyers were trying to make is that there is nothing that is cut and dry in this case. Lawyers from both sides can try to come up with any and every kind of legal spin that they see fit to try and litigate this case. They went on to point out that if this case is litigated it will become a case that is tied up in court for quite some time because it can and will be a precedent setting case that will have a historic precedent setting outcome.

And as one lawyer pointed out, the bottom line is that while trying to save the taxpayers money by attempting to stop AIG from dishing out this bailout money in the form of bonuses, it will probably cost the taxpayers millions of dollars in legal fees trying to do so.

It's almost as if we are in a lose lose situation here.

In my opinion, before the government threw any money at these financial institutions, our representatives in Congress should have done with AIG, Citibank, etc. something similar to what they did with the auto industry: told them that if they wanted the government to bail them out with government loans then they first would have to sit down with the unions and that both sides would have to make some concessions, provide some givebacks, and show the government that they have done so.