Raines should be in jail. He presided over a trillion dollar accounting fraud and got away scott free because Congress and the OFHEO didn’t want to admit they let a guy loot the Treasury for years. The company had to spend two years and $100m+ to fix the accounting. (I spent some long nights on that project.)

However, that doesn’t mean that nobody at AIG or Fannie or Freddie deserves a bonus. There are undoubtedly a few decent people there trying to minimize losses, and that’s the folks you want to keep. If you can pay a guy an extra $800k to save you a hundred million dollars, you do it. So its not quite so clear cut.

And by the way, AIG was *stolen* from the guy who built it (Greenburg) by NYAG Elliot Spitzer and then put in the hands of a guy who couldn’t hack it. AIG is a very complex company and there’s probably only a handfulof people alive who can run it properly. None of them will work for $250k or $500k or whatever the cap is now, especially once you factor in DC or NYC taxes, so its just going to hemorrhage taxpayer money.