Don't get me wrong: I believe that taxpayer funded bonuses for the employees of failed divisions at failed companies is as egregious as the next guy, however I do think that we have some bigger fish to fry.
Rising unemployment, saving the banking system, rebuilding the regulatory framework for the financial sector (look at Canada - its regulatory framework has kept their banks profitable), saving the domestic automotive industry, and administering the bailouts, stimulus plans, etc., all require much more focus than AIG's compensation model. Especially when we also consider the problems related to the collapsing manufacturing sector, the national debt, education, energy, healthcare, the wars in Afghanistan and Iraq and the overall war on terror.
Call me crazy but I think that the government needs to stop running around like a chicken with its head cut off every time something happens that raises the ire of the populists, and learn to triage the issues at hand and focus its energies on our biggest problems.
Taking back bonuses isn't going to create jobs.
If anything the populists should focus their energy on the fact that the government is currently infested with the very politicians whose blind eye, ignorance, affinity for deregulation, etc., are all heavily responsible for the current economic crisis. Wall Street may have been infested with greed and risk addicts, but Congress is literally infested with their enablers.
We need to stop focusing our energy on the things that upset us, and focus instead on the things that will generate the most positive benefits from an economic perspective. Should we go after AIG for the bonuses if we can? Sure. But let's worry about our biggest problems first.
Disclosure: at the time of publishing the author didn't own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn't be viewed as financial or investment advice.