A deal is a deal

Look, can we get over all this gnashing of teeth and tearing of hair about the bonuses at AIG? It is not productive and threatens our economic recovery.

Yes, it stinks that AIG is paying out $165 million in bonuses to the boys (and girls?) whose activities brought their company not only to its knees, but into government ownership (80 percent). Barney Frank screams his outrage. President Obama says it is about values.

Okay. But a key value in business is keeping your word. An important business activity is signing contracts, and then honoring them. A deal is a deal.

Or nobody will do business with you.

There may be a whole slew of good reasons why those bonuses should be paid. There are many reasons why it may hurt to do so. Read the letter from AIG CEO Edward M. Liddy to Treasury Secretary Timothy F. Geithner (read it here). He didn't like it either.

But the bottom line is that contracts need to be honored.

Now that the government owns most of AIG, the last thing it should do is destroy the company. But that will be the result if government runs the business like government, instead of like a business.