The Ice Gets Thinner

It's clear -- even in advance of AIG CEO Edward Liddy's testimony before Congress today -- that the politics of the AIG Bonus Scandal are simple: bonuses for an insolvent but-for-the-government entity are making the American taxpayer, and his elected representatives, crazy.

And that doesn't even take into account that at least some of the so-called "retention" bonuses went to former AIG employees, at least according to NY AG Andrew Cuomo.

But what's really dangerous is the toxicity that is now spreading in the body politic.

Last fall, when the crisis erupted after the Lehman, Congress and the Bush White House were able to pass the TARP on a bi-partisan basis and stem -- at least for a moment -- the market meltdown.

But if another credit crisis -- say, relating to credit card debt -- or other shock to the system took place today, it's hard to see Congress authorizing any more money to 'save Wall Street.'

So if we are through the worst of the financial crisis, we can edge back from the thin ice towards shore.

But if we are not, and we need another stimulus or, worse (from a political standpoint), stronger medicine for the banking system, it could be "Look-out below!"

Photo credit: Haninge, Sweden