I just wanted to respond to Anne’s recent CLS Blog posting and address the question that the Obama administration seeks to resolve: how can we get the $165 billion in bonus payouts back from AIG employees?
Taxpayers are thoroughly offended that AIG has recently distributed millions in bonus money to nearly 400 of its employees. Indeed, these employees contributed to the financial disaster that plagues AIG, which has already received $170 billion in taxpayer bailout money. So, can we get this money back, or is “a deal a deal?”
Well, some suggest that the answer lies in basic legal principles. And in response to Anne’s call to 1Ls, I think I will whip out my contracts outline from last semester. Ok, so I threw that out. But, if my memory/Wikipedia serves me correctly, it seems that the impracticability doctrine – amongst other fine doctrines – could allow for AIG to rescind these employee-bonuses contracts.
Here, the nonoccurrence of AIG’s financial insolvency – which would necessitate an unprecedented taxpayer takeover – seems like a basic assumption to the contract. And I suppose that it is impractical for any broke company to pay out millions of dollars in bonuses.
Therefore, it could ultimately come down to who ought to bear the risk of this occurrence. Arguably, the AIG bonus recepients – who worked within the company’s financial products unit – were in the best position to avoid the problems that resulted from poor investments and risky trading positions. So, is “a deal a deal?” Probably not.