Test the Market

According to today's New York Times, A.I.G. chairman Edward Liddy defended bonuses the play to pay out thusly:

“We cannot attract and retain the best and the brightest talent to lead and staff the A.I.G. businesses — which are now being operated principally on behalf of American taxpayers — if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury,” he wrote Mr. Geithner on Saturday.

The story also reports:

The bonuses will be paid to executives at A.I.G.’s financial products division, the unit that wrote trillions of dollars’ worth of credit-default swaps that protected investors from defaults on bonds backed in many cases by subprime mortgages.

The bonus plan covers 400 employees, and the bonuses range from as little as $1,000 to as much as $6.5 million. Seven executives at the financial products unit were entitled to receive more than $3 million in bonuses.

Two thoughts:
1) That's the best and the brightest talent? That's the irreplaceable talent A.I.G. has to protect?
2) Let those executives test the job market. People have the jobs they have for a host of reasons, money being just one of them. If the lack of bonuses at A.I.G. causes some to look for new work, they'll do so with their role in the economic collapse on their resume. But that's arguing a non-point - Liddy's defense is a mere pretext for maintaining a compensation structure he and everyone at A.I.G. want.