I was for letting AIG fail, and I still think that it would have been to logical course to take. I completely disagree with fear mongers who say that this would have brought the whole financial system down. Although AIG was unique in the conglomeration of different varieties of insurance, there are quite a few giants that are salivating at the thought of purchasing sectors of this company at bargain prices.
Now that the taxpayers own 80% of AIG, the bonus fiasco is but a small example of what any enterprise managed by the government will look like. Governments don't go bankrupt, and as such have zero incentive for disciplining themselves. Now AIG has the survivability of the IRS or any other bureaucracy that exists despite the fact that all it does is damage to the country.
Finally, while we are on the subject of AIG, no one is mentioning the role of ex governor Spitzer in bringing down Hank Greenberg, the legendary CEO and builder of this company and majority stockholder. The day that Greenberg left AIG was the day that the hanky panky started. When the history of this crisis is written, Spitzer will be shown to have have screwed not only prostitutes, but the American people.