The sanctity of contracts [updated]

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Today on All Things Considered I heard some New York Times reporter named "Andrew Ross Sorkin" try packaging a lame apologia for criminally incompetent executives as good old American contrarian horse-sense. His point seems to be that the government can't just "rip up contracts" because we have laws, and therefore AIGFP retention bonuses (for example) "must" be paid if we (we-who, he didn't say) are to retain the fabric of trust in society. Or something.

To her credit, ATC co-host Melissa Block quizzed this fool about the difference between ripping up AIGFP executive bonus contracts and ripping up union contracts as part of the in-progress auto industry bailout. But I wish she would have told him that nobody is literally expecting the government to "rip up contracts." By failing to follow up insistently to question Sorkin's premise, she allowed him to waste 3 minutes of my time in the car that I could have been listening to "Playground Psychotics." Meanwhile, Sorkin explained to all us rubes that "we" really need to keep these AIGFP execs on board because they're the only ones how know how to "unwind" the exotic derivative securities that they conjured. Yes: they need to be paid excessive bonuses in addition to their salaries so they will continue to do the jobs they are contractually obligated to perform.

See, the way I process this in my cinder of a brain, I am convinced that both parties to an emploment contract need to honor said contract. Therefore, before we hear any more horseshit like this from reporter Sorkin, he needs to employ the Google, Nexis and Lexis, his telephone, and his Outlook address book to find out for the American public (who is an 80 percent majority shareholder in AIG) whether the AIGFP bonus recipients did in fact fulfill the terms of their contract. If he's too frightened, lazy, or unskilled to do that, then he could at least check TPM a few times a day to keep up with the facts of the story... just for appearances.

When it's time to unwind" the AIGFP mystery securities portfolio for real, we AIG majority shareholders won't need to pamper and coax reporter Sorkin's smarmy MBA pals to do that job. We will go to the real experts: auditors, bank examiners, criminal investigators, and federal prosecutors.

Update: that cute little Ezra Klein addressed a similar topic today, referencing Sorkin's NYT column as source material. There's a bit of ambiguity in his point, however, possibly due to the lack of vetting his text through a simple country editor. To make up for the ambiguity, there are a number of interesting remarks in the comments thread below the post. No, we can't confiscate money from a small, specific group of people without any valid legal framework. Yes, there are many possible ways to approach the quashing of the AIGFP bonuses, such as legislation about executive bonuses working in corporations that have accepted TARP funds or giving AIG a friendly reminder that they're fucking bankrupt and must settle up with a long line of customers and shareholders before making good on contracts that rewarded gross mismanagement or worse. One commenter suggests freezing the accounts out of which executive bonuses are to be paid pending the outcome of a fraud investigation; I like that one.