From the Populist Outrage File: Blame it on the Contracts

Considerable populist outrage is being directed towards AIG, which is planning to pay around $120 million in bonuses to employees.  Some of these employees were “executives in the same business unit that brought the company to the brink of collapse last year.”  Good use of bailout money?  AIG and the Treasury say that the firm has no choice:

Word of the bonuses last week stirred such deep consternation inside the Obama administration that Treasury Secretary Timothy F. Geithner told the firm they were unacceptable and demanded they be renegotiated, a senior administration official said. But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them.

Renegotiation of union contracts is possible (indeed, union concessions are expected in this economy).  Why are executive contracts iron clad?

[Meredith R. Miller]