AIG paid out over $100 billion in bonuses last week and the Obama administration indicated they might try to prevent this from happening. That didn’t happen:

Treasury has determined there is no way the government can actually extract the money from the individuals who already received the bonus payments. The government would face lawsuits with the potential of significant damage payouts and lawyer fees that could easily exceed the cost of the bonuses.

It was announced yesterday that an additional $30 billion in government aid would be made available to AIG after they posted a $61.7 billion loss, the largest quarterly loss in history. They are not being handed the money yet but the Fed put it on the table so that the ratings agencies- who were on the verge of downgrading AIG’s rating, making what they do have useless- would back off.