AIG Bonuses: Are They Legally Binding?

This is a rush transcript from "On the Record ," March 16, 2009. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: We are live outside of AIG headquarters in New York City, and we know most of you are angry. AIG just received more than $170 billion -- that's a B, billion -- of your dollars for a bail-out. But that's not all. Now they want you to pay their executives $165 million in bonuses. You are not the only one unhappy. The president has jumped into this. He wants to block AIG from giving out the $165 million in bonuses. Is there anything our government can do to stop this?

Joining us live is Steve Moore, economics writer for The Wall Street Journal and co-author of "The End of Prosperity." Steve, $165 million -- that's a lot of change. Is there anything that can actually be done?

STEPHEN MOORE, WALL STREET JOURNAL, "THE END OF PROSPERITY" CO- AUTHOR: Well, first of all, Greta, the outrage across America is just palpable. I bet if you were to ask the next 20 people walking down the street there on Wall Street what do they think of this, they would -- not a single one would say it's a good idea. If you were on Main Street, probably 100 out of 100 would say it's a terrible idea. Americans just feel they're being bilked now, and it really reflects very poorly on Wall Street.

Now, your question, can we do anything about it? Sure. The government, I think, has the authority to step in and stop -- stop these contracts. I mean, how in the world can you pay people a performance bonus when you lose $160 billion? That's the question nobody at AIG can answer.

VAN SUSTEREN: I -- you know, I find it appalling, and I think probably the CEO who's government installed, the current one, would really like to be able to take it back, saying that, We need these contracts to retain the best and the brightest. I mean, if that doesn't make everyone crazy, I don't know what will. I'll take the dummies...


VAN SUSTEREN: If the best and the brightest did this, I'll roll the dice! Pick me! Pick me! I couldn't do worse!

MOORE: Exactly.

VAN SUSTEREN: I'm a dummy, so pick me.

MOORE: I mean, it doesn't -- it doesn't take a genius to lose $150 billion. The Three Stooges could do that. You know, and I want to be very clear here on this. I am not someone who's against big bonuses for people who perform. If you've got a Fred Smith at Federal Express or a Jack Welch at General Electric that makes billions of dollars for shareholders, I'm all in favor of paying top talent top dollar. But we're talking about a situation here where this company wouldn't even exist, Greta -- it would not exist today if the federal government had not stepped in two months ago...

VAN SUSTEREN: Well, but...

MOORE: ... with its first tranche of money.

VAN SUSTEREN: But that's the irony of it. If the government hadn't stepped in, it would have been thrown into bankruptcy.

MOORE: Right.

VAN SUSTEREN: If it had been thrown into bankruptcy...

MOORE: That's right.

VAN SUSTEREN: ... all these contracts, including this bonus, would have been restructured, and we wouldn't be -- we wouldn't be stuck here for $165 billion. But because we were generous as a nation and bailed them out, maybe smartly or stupidly, I don't know what -- now they're sticking it to us again. They want $165 million because we were stupid enough to bail them out and not put them in bankruptcy, where we know we could have gotten rid of these contracts.

MOORE: That's right. But the companies would not exist, and I think it's really incumbent on the federal government to say, Wait a minute. What exactly are we paying bonuses for? I mean, these are supposed to be pay-for-performance bonuses. You know, the vast majority of Americans who work on a commission or work for bonuses didn't get anything this year because the economy...

VAN SUSTEREN: But you know...

MOORE: ... did so poorly. So why should we feel sorry for these folks, who are -- many of whom have large contracts to begin with if they're not going to get bonuses?

VAN SUSTEREN: But the other outrageous thing, Steve, is every single member of Congress who voted for this bail-out of $170 billion and didn't bother to read or didn't bother to investigate...

MOORE: That's right.

VAN SUSTEREN: Every single one of those sitting at home tonight -- you know, none of them ever read these bills. No one investigates. They just, you know, were -- they're willing to sign away our money. If they would just take -- take two hours and read it instead of just sign off because they say their staffs did -- you know, every single one of them is at fault.

Watch Greta's interview with Stephen Moore

MOORE: Good point.

VAN SUSTEREN: And this isn't the president. This isn't President Obama. This is everybody else this time.

MOORE: This is a really important point, Greta. If people are angry about this, some of the people they should be angry about at are the members of Congress who voted this money. It was -- basically, what we did, Greta, a couple months ago was we just simply wrote a blank check to this company, and we did that for a lot of these investment banks and we didn't put any conditions on it. There was no condition about...

VAN SUSTEREN: They didn't read it!

MOORE: ... Are we going to pay these back salaries for people who lost money.

VAN SUSTEREN: You know what, Steve? I almost hope they did -- I almost hope they didn't read it and voted for it because, otherwise, I think they were stupid. I'd almost rather have them not read it, you know, than they were stupid. You know, that's almost better...


VAN SUSTEREN: ... so appalling.

MOORE: It's one or the other -- that's right. And you know...


MOORE: ... to the point of -- this gets to the point of why is it that we continue to put these big, major financial decisions in the hands of Congress. I personally think we should look back and ask the question, Was this kind of bail-out even necessary in the first place?


MOORE: Or was it...

VAN SUSTEREN: I got to go.

MOORE: ... a wise judgment because -- hold one last point...

VAN SUSTEREN: I got to go.

MOORE: Where is the...

VAN SUSTEREN: No, I got to go! We're having a hard break!

MOORE: Where is the $150 billion?

VAN SUSTEREN: We're going to get cut off!

MOORE: Where's the money (INAUDIBLE)

VAN SUSTEREN: Steve, thank you. I got to go. The computer is cutting us off.

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