Again, when will the counterparties to AIG's CDS contracts be named? I believe they were paid out at face with the bailout money. We should know to whom this direct transfer of taxpayer money was sent.
It would have been fair for those counterparties to be stuck (they could sue, there would have been some compensation) or, to cut to the chase, they could have agreed to a negotiated amount equal to their expected litigation proceeds. And, perhaps if there truly was systemic risk, the government could have funded some of that negotiated amount as an advance to AIG.
For the government to have bailed out the counterparties (I'm guess GS for a lot of it) at FACE is wrong wrong wrong.