A few things seem reasonably clear:

1. The administration can't force AIG to abrogate the bonus contracts; they're claiming their hands were tied by Congress (and Chris Dodd in particular); they're not going to claim or invent any new legal authority here.

2. The administration will subtract the bonus money from the latest $30 billion loan extended to AIG.

3. Congress will pass a law levying an excise tax; it will probably apply to a range of companies -- not just AIG; the law will be challenged in court.

4. The Fed and the Treasury did not -- could not -- review all of the employment contracts.

5. The singular focus on executive compensation restrictions after the fact obscures -- though does not excuse -- the atmosphere during the House/Senate/White House negotiations on the stimulus bill.

6. Watch for the Treasury and the Fed to begin a new review of contracts for top executives/performers/traders at major banks/financial institutions. It's not clear what the government can do, but they don't want to be surprised

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