The more I read about this, the more convinced I've become that:
1) The bonuses themselves comprise an inconsequential amount of the total AIG bailout (now approaching the $170 Billion mark)
2) They represent a promise to AIG employees to stay on during a time of extreme turbulence, with little hope of career advancement in the firm or elsewhere (indeed, one might be tempted to forgo mentioning one's tenure at AIG altogether). In fact, the affected employees weren't even in the division of AIG that contributed (caused?) the melt-down.
3) Congress knew of these bonuses well in advance (cf: the Dodd Amendment)
Actually, I'm with Sen Dodd (D-CT) on this: these folks should be well compensated for their service.
Now, these same Congresscritters have passed a clearly unconstitutional bill in an effort to clean up a mess of their own making. This is not just bad law, it is bad business practice: why would anyone take such a job, knowing that the compensation promised to them could be revoked at the slightest whim? This is why CEO's insist on, and get, "golden parachutes:" to entice them to come aboard a potentially sinking ship, in order to try to their best to salvage what they can.
Which brings up the next problem: we now own 80% of a failing financial giant, which is in desparate need of competent, expert helmsmanship, and we've just announced that whatever sucker takes the job can't rely on being adequately compensated for it. That's dangerous and stupid.
What happens when the next AIG falls through the floor? Will we bail them out, too? And how are we going to guarantee whomever is tapped to bring them up to snuff that they're not working pro bono?
I'll reiterate that we should never have bailed out AIG in the first place, but essentially shooting the messengers isn't going to get us out of this mess. We now own 80% of the firm, and the government now has a fiduciary responsibility to the shareholders (that's thee and me, fellow taxpayer) to do all in its power to empower AIG to right itself. That's not going to happen if it can't attract, much less retain, the caliber of executive necessary to turn things around.
As I said in a recent comment, "Hypocrisy, thy name is Congress."