AIG?

Okay, so I'm not any kind of a financial wizard or anything, and I'm sure other people have already thought of this, yada, yada, yada, but as a lawyer, I would ask... why is the government surprised that AIG is paying out those bonuses? I mean, if you were handing over that much of a dole to someone wouldn't you have conditioned delivery of the funds on a few things, such as that the money is not to be used to pay out bonuses, regardless of AIG's "contractual obligations" to do so?

It's the Federal Government. Essentially, they can do just about whatever they want to. They could have structured the bailout money as a loan and then as one of the loan conditions limited the ability of AIG to make distributions or otherwise make payments to employees outside of standard payroll operating expenses (with reasonable limitations thereon). It seems to me that there was no good reason why the bail out money couldn't have come with limitations. It seems like a bit of a "too little, too late" now trying to get the money back! Oooh, let's try and shame the executives into returning it. Sure, that'll work!