News that executives at AIG will receive a cumulative $165 million in bonuses has many Americans and political pundits up in arms, according to ABC News.

The bonuses were part of compensation packages supposedly enacted before AIG lost $65 billion in the final quarter of 2008 and prior to the company receiving more than $170 billion in government “bailout” money. In addition, many of the recipients are the same executives who oversaw the divisions responsible for the huge AIG losses.

So who is right and who is wrong? According to Lawrence Summers, chairman of President Obama’s National Economic Council, “We are a country of laws.” He said that there is no way to stop the payments. “There are contracts. The government cannot just abrogate contracts.”

If nothing else, the payments should be a huge public relations and policy nightmare for Congress, which passed the AIG bailout and economic stimulus package so quickly that it barely had time to understand exactly what it was voting on. It seems that expediency here was not in the best interest of the country or the economy. Perhaps some thorough discussion and research would have prevented such a scenario.

Still, the entire think stinks, whether it is from the position of AIG using taxpayer money to pay for bonuses, or Congress passing legislation without considering its consequences.

The issue gives more ammo to those who would seek to bring parts of AIG under government control, which I wrote about in a previous blog.

But what can AIG CEO Edward Liddy do to stop or minimize the payments? Should he stop or minimize the payments?