Outrageous rewards for risky actions

We have lost our minds.

When the history of the Great Recession is written, what better illustration of our collective mental breakdown could there be than the AIG saga.

MY OPINION: THOMAS OLIVER
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We are on the edge of mass hysteria over the payment of $165 million to some 400 employees of the unit that insured much of the risky behavior that has sent the world careening from one crisis to another.

What’s driving us nuts is the insanity.

There is no legitimate bonus plan that pays out when the company crashes into the ground.

Paying bonuses for causing the collapse of the company is, by definition, insane. It also could be fraud, which prohibits conveying company assets without receiving fair market value. Ditto the standard “acts of God” clauses that would void contractual obligations.

Those contracts are no more redeemable than Confederate money. And if they’ve already been paid, then send in the collectors.

Our economist in chief, Lawrence Summers, says the government might not be able to do anything about agreements reached prior to the takeover of the failed insurance giant.

“We are a country of law. There are contracts. The government cannot just abrogate contracts,” he said in a TV interview Sunday.

The government can’t, but bankruptcy judges can.

Here is further proof that AIG should be in bankruptcy court, along with GM.

In bankruptcy court, ridiculous contracts get tossed. Quickly and without a congressional sideshow.

If the president’s team of lawyers can’t figure this out, he needs a new team, because this ain’t brain surgery. Or high-level law.

But then again, maybe it is.

What the president, his advisers, Cabinet members and members of Congress seem to have forgotten is that AIG is a subsidiary of the federal government.

There is no distancing the chairman or the board from the actions of its management. You can’t take over a company and then act like it’s acting on its own.

But then again, you can’t expect a government-owned subsidiary to pay the consequences of the marketplace either. If we won’t let the marketplace work, then we shouldn’t accuse the marketplace of not working.

We have so distorted the marketplace that we are living the definition of insanity: We keep doing the same thing over and over and expecting different results.

Too big to fail is becoming the babble of the asylum. Too big to fail is what brought us here.

We are reaping the whirlwind of the risky behavior we continue to underwrite. Like parents unwilling to accept the notion their children will never grow up unless they have to, we increase their allowance at the same time we demand they get a job.

Mr. President, if you want to stop these outrages, quit funding them.