AIG Bonus Payments

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Tom Baker
Professor of Law
University of Pennsylvania

• Researches and teaches insurance law and policy, insurance and society, law and economics, sociology of risk.

“The bonus payments show that it’s time to put the AIG holding company into a federally managed bankruptcy and reorganization proceeding. The insurance company subsidiaries are in good shape and will keep operating under the protection of state insurance regulation. There is precedent for this, and the bankruptcy of a holding company does not threaten the solvency of the insurance companies. The market has already reacted to what all insiders already know: the AIG holding company has failed. Once the holding company is in bankruptcy, it’s a simple matter to stop AIG from doing foolish things like paying $160 million of taxpayer money to people in the same unit that drove AIG into the ground.”