Treasury Secretary Tim Geithner has announced that the government will deduct the amount of the controversial bonuses AIG has paid its executives from the company's next TARP installment -- a sum of $30 billion. That deducted amount only represents approximately .55% of the money AIG is slated to receive from the government.
Geithner's decision looks more like a "short-term" loan than a solution to the controversy. AIG has borrowed and will continue to borrow TARP funds. The government has decided to take back the dollar value of the bonuses at the time of the next installment -- which is the same thing as a decision to accelerate AIG's "loan" repayment schedule in the amount of $165 million.
My Guess: The President wants this thing to go away -- NOW. This decision could help put the matter to rest, but nothing is certain with this story.