Optically it looks bad when a company on life support gives “bonus” money, but newspapers rarely actually look into what that “bonus” money is actually doing and who is receiving it. The problem is that like any big company, some of these banks have separate divisions wholly unrelated to the subprime/derivatives disaster, and which may have done well. Their profits vanish in the vast sea of red flooding in from the incompetent divisions, but that doesn’t mean they don’t deserve a reward. While you can ask people to forego earned bonuses for the “sake of the company” in this market you’d have to be an idiot to give up any money you’re owed and I can’t imagine employees doing that. And if there’s a contract involved, it’ll be hard for the government to intercede without triggering lawsuits — which in turn may ultimately cost us all more than the bonuses themselves. Whatever the situation, I’m sure Obama will blunder into it like a bull in a china shop, placing conditions on the funds such that banks either refuse to accept them, or tangle up the government in years of private litigation.