I saw Rep. Frank from Massachusetts (?) or Connecticut (?) on the "News Hour" with Jim Lehrer on WTTW. I don't know much about either Frank or Lehrer (conservative vs. liberal). But Frank said 2 things I had not thought of. The first one makes sense to me. The second one, I don't know how they would make that work.

First - When this bail-out was being planned at the end of the Bush administration into the beginning of Obama's Presidency, the government gave the money to AIG with no conditions attached to it. That is, they did not tell AIG beforehand that AIG could not use the money to pay bonuses -- whether the people who were up for bonuses were entitled to them or not.

Also, since the government has now given AIG so much money, they pretty much own the company, so theoretically they are entitled to some say in how that money is distributed. (this was Rep. Frank talking)

However, AIG contends that they need to pay bonuses to retain the best people in order to earn back the funds to repay American taxpayers.

*sticks head in sand*