On another note, every employment contract I've ever seen, and I've seen a few at this point, make bonuses discretionary. What gives with these AIG contracts? I'm a big believer in the sanctity of contract, and I think one of the reasons that the dollar has managed to stay relatively strong in this mess is the fact that our Federal Court system is a relatively unbiased forum for settling contract disputes. Investors know they can enforce their rights in the U.S., which is more than you can say for China or Russia. But the fact that AIG was allegedly writing contracts for such a large amount of non-discretionary bonuses is suspicious. When were these contracts written and what did signatories know about the state of AIG's balance sheet when they signed them? There may be legitimate ways to void these contracts, at least as to the bonuses, that don't tread on the sanctity of contract. Fraud and public policy comes to mind. After all, AIG would have gone under and wouldn't have been able to pay these bonuses without taxpayer money.
