What happened

Facing a growing political storm, President Obama said Monday that he'd asked the Treasury to “pursue every single legal avenue” to block $165 million in bonuses to AIG’s Financial Products unit. (Watch the video) Administration officials said the bonuses were distributed last Friday, but that the Treasury would try to recoup the money as a condition for AIG’s drawing down its next $30 billion in bailout funds. (The Wall Street Journal)

What the commentators said

AIG’s rationale for paying these economy-wreckers, said Roger Simon in Politico, apparently accepted by Obama’s economic team, is that it was contractually obligated to do so. “Baloney.” Contracts get breached all the time. If these executives want their bonuses, let them sue to get them.

Having taxpayers foot the bill for those bonuses stings, said Andrew Ross Sorkin in The New York Times. But it’s best to “swallow hard and pay up.” First, the “sanctity of contracts” really is essential for all business transactions. And second, these derivatives “brainiacs”—on the verge of fleeing AIG, and yes, someone will hire them—might be the only ones who can “defuse” the financial “bomb” they built.

“Maybe there’s a simpler path,” said Matt Miller in The Daily Beast. Obama could just ask the executives to give back the money, appealing to their patriotism and sense of public service. If they say no, he could add an “incentive”—he’ll publish their names and bonus amounts, and let the public be the judge.

The American public owns 80 percent of AIG, said the Chicago Tribune in an editorial. So, America, “how do you want your company run?” Before you give incentives for “talented staff” to leave, remember, as top shareholders, you will benefit only if AIG “survives and thrives.”