Five Dumbest Things on Wall Street: March 20

How Do You Spell 'Stupid?' A-I-G

With great pride, we hereby enshrine American International Group(AIG) into our Five Dumbest Hall of Fame.

Never in the field of corporate folly has a single company been worthy of so much ridicule and at the expense of so many. For all the asinine things AIG has done for us, we elevate it into the highest circle of idiots.

To commemorate this special occasion, and with the hope that AIG's pratfalls provide us with column fodder for years to come, we offer you AIG's dumbest highlights that have recently come to light.

AIG, which was saved from bankruptcy by $170 billion in federal bailout funds, revealed that it paid $220 million in "retention" awards to its financial products employees, the very same unit responsible for selling the risky credit default swaps that drove the company to the brink of bankruptcy.

Edward Liddy, the CEO of AIG, justified the hefty bonuses in a letter to Treasury Secretary Timothy Geithner dated Saturday saying that AIG needs them to "attract and retain the best and brightest talent."

If that weren't galling enough, AIG granted bonuses of $1 million or more to each of 73 employees, including 11 who no longer work for the company, according to New York Attorney General Andrew Cuomo.

Dumbness, in its severe forms, is contagious, and AIG is the equivalent of the plague. Hence, more fodder for the company's entrance into the Hall of Fame. Get this: In a letter to House Speaker Nancy Pelosi, Geithner defended his inability to prevent the bonus payments from AIG, now 80% owned by the U.S. government, saying the Treasury's "lawyers agreed, in consultation with outside counsel, that it would be legally difficult to prevent these contractually-mandated payments."

And still more are now infected: On Monday, Goldman Sachs(GS), which had last autumn denied having any "material" exposure to AIG, was revealed to be the biggest beneficiary from the bailout of AIG, receiving $12.9 billion of recently received government money to settle credit default swap (CDS) trades between the two firms. The bailout's chief architect, of course, was former Goldman CEO and later Treasury Secretary Hank Paulson, and Liddy himself was a Goldman board member until he stepped down to take the top job at AIG.

And, unfortunately, no one is apparently immune. President Barack Obama told reporters Wednesday that his administration was not responsible for a lack of federal oversight that preceded AIG's demise. But Obama added, "The buck stops with me."

We did like one piece of advice that came out of Washington this week. In a radio interview Tuesday, Sen. Charles Grassley (R., Iowa) said AIG's executives should "follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide."

Yo, Chuck. We like your attitude. Only one problem: Unless these AIG execs have life insurance policies with the U.S. Treasury as beneficiary, that option -- while pleasant to ponder -- won't work.

But give us a call. We can put the Hall of Fame, and the newly enshrined AIG brass, most any place in the world. What's your thoughts on Leavenworth or Sing Sing?

Dumb-o-meter score: 100 -- Take a bow, AIG. You earned that perfect score.