The title of a recently released CBS News article is "Why Failing Companies Still Pay Bonuses: Experts say bonuses work well when done right: that just hasn't been the case lately". The first part of the title should be "Why (do) Failing Companies Still Pay Bonuses?" Rewarding bad behavior seems to be counterproductive and counterintuitive. Yet this is exactly what's happening to AIG because 'It's too big to fail'.

The first sentence of this article is "Many people can't understand how failing companies can (still) pay out staggering bonuses TO THE VERY EMPLOYEES WHO GET THEM INTO TROUBLE IN THE FIRST PLACE". Unfortunately, this is what happens in the corporate world. The CEOs of Citigroup, Merrill Lynch, AIG, GM, Ford and Chrysler ARE ALL WORKING FOR US$1/YEAR. Is that possible? No way. People are all too eager to go from rags to riches. No one is idiotic enough to go from riches to rags. $1/year is their disclosed salary, but surely they earn money in other ways that no one else can know about.

The first person to vent his anger at AIG was Barney Frank, chairman of the House Financial Services Committee: "The problem is the incentive structure. Heads they win, tails they break even". So if AIG were to continue running as an unregulated entity/company, it seems like no one loses, right? Wrong, because we the taxpayers have to keep paying for AIG's ridiculous decisions. And they have made plenty of them since 2007 when this financial mess started.

According to David Wise, a compensation consultant, "Incentives work when they're designed appropriately". So what's the litmus test for "appropriate" incentives: "..good incentives keep executives in the company's best interests", "reward long-term (good) performance and most importantly, don't pay out when the company fails to perform". AIG wants to keep executives, but not "in the company's best interests", they rewarded "long-term (bad) performance" and they "paid out" when the company failed to perform.

Wise added that "And the compensation plans in America usually fail (at least) one of those tests".

According to Peter Morici, a University of Maryland economist, "The bonus structure on Wall Street has contributed mightily to the global financial meltdown". In short, executives at AIG and many other insurance companies and financial institutions throughout the world have been getting lavish bonuses without earning them.

Morici continued: "If you do that with a banker, HE BECOMES INCLINED TO write bad mortgages and write bad loans SIMPLY TO HAVE THE VOLUME OF LOANS HE NEEDS TO PAY THE BIG SALARY HE WANTS". In other words, people who want to become corrupt officials will say 'If other people can do this and get away with it then there's a good chance that I can get away with swindling too' and that's the wrong message.

Wise chipped back in: "So you can't just have one great year and (then) walk away with a huge bonus and not care about what happens over the next four years". This sounds just like something that Obama would say. Jokes aside, this statement pretty much sums up the greedy culture on Wall Street that has been there for the past few years and this is precisely why the financial markets need to be reformed. The tough question is: how to do that and keep everybody happy, executives and small investors, not just executives because who HONESTLY believes that executives like Liddy the CEOs of Bank of America, GM, Ford and Chrysler are only working for A GRAND TOTAL OF US$1/YEAR AFTER MAKING MILLIONS JUST 1 YEAR AGO UNDER BUSH?.This is inconceivable. Sure this is what we hear and read, BUT THIS IS BECAUSE THEY ALREADY HAVE MILLIONS IN COMPENSATION STASHED ELSEWHERE AND THEY DON'T HAVE TO REPORT WHERE THEY GOT ALL THAT EXTRA MONEY FROM BEFORE THIS UPROAR STARTED.