Can you imagine this! American International Group (AIG) is paying its employees $100 million in bonuses.

This is after AIG was bailed out to the tune of $182 billion by the U.S. government. The government owns 80% of the insurance giant. AIG employees have agreed to a $20 million cut. However, some employees are screaming that that is not enough. They claim that their contracts dated earlier than the bailout must be honored.

Former U.S. Treasury Hank Paulson was not subtle in his opening remarks Wednesday to a U.S. House committee investigating both the U.S. Treasury's decision to bail-out American International Group, Inc. (AIG) via 100% payments to its counterparties, and the U.S. Federal Reserve's quantitative easing policy.

Paulson, said had federal policy makers not acted to save AIG, a failure of the financial system could have ensued, and pushed the U.S. unemployment rate to a Great Depression-esque 25%, marketwatch.com reported Wednesday.

Today was potentially a fairly quiet trading day when you consider how volatile the day could have been. We had Tim Geithner and Hank Paulson both getting grilled over American International Group, Inc. (AIG) again in front a House Panel, we had an FOMC rate decision, and tonight is the State of the Union speech from President Obama. Throw in disappointing housing data in December new home sales and you had a potential powder keg. Stocks spent most of the day in the red, but a move late in the day wiped all that out.

Here were the unofficial closing bell levels:

Dow 10,236.09 +41.80 (0.41%)
S&P 500 1,097.25 +5.08 (0.47%)
Nasdaq 2,221.13 +17.40 (0.79%)

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The Obama administration is announcing plans to impose a "financial crisis responsibility fee" on large banks that received TARP money.

The tax will seek to raise $90 billion to cover expected losses on TARP, and will be levied only on large institutions: about 50 companies will have to pay it.

The Federal Reserve picked up a $52.1 billion profit last year, a record for the organization. The result is due largely to its 2009 bailout efforts. Of the profit generated, $46.1 billion will be handed over to the Treasury Department -- the largest profit payment made since records began back in 1914. The previous record was $34.6 billion, in 2007. Last year, the Fed turned $31.7 billion over to the Treasury Department.

According to the Associated Press, the profit didn't come from the $700 billion lent to financial institutions -- and then to auto companies like General Motors. Rather, it was the result of earnings from the securities it had in its portfolio last year. Several investment programs were launched last year to help kickstart the U.S. economy and drive down rates on mortgages and consumer debt. Through the programs, the Fed bought $300 billion in government debt, and under another, it's on a trajectory to buy $1.25 trillion in Freddie Mac and Fannie Mae mortgage securities.

Retailers appear to have been rescued at the last minute, according to data from the International Council of Shopping Centers. Shoppers looking for deals the week before Christmas -- and making up for the day lost to stormy weather on the East Coast -- spent aggressively, sparing the retail sector a dismal 2008-like performance.

The healthy conclusion to the holiday season led to a positive change from November and made December one of only three months (including September and October) in which retail sales increased year-over-year.

Did the Federal Reserve gag American International Group (AIG)? Emails first reported by Bloomberg News show that the insurer wanted to disclose information about the payments it made to such banks as Goldman Sachs (GS) and Deutsche Bank (DB) to cancel some financial deals. But, lawyers for the New York Fed, which was led by Timothy Geithner at the time, told AIG to pull that information out of a report it was going to issue.

The AIG bailout is being questioned by watchdogs, which accuse the Fed of doling out billions of dollars to banks that weren't necessary -- especially now that big bonuses are piling on.

American Int'l Group (AIG) closed at $29.14. The Federal Reserve Bank of New York, then led by current Treasury Secretary Timothy Geithner, told American Intentional Group to withhold details from the public about the bailed out insurer's payments to banks during the height of the financial crisis, Bloomberg New reported Thursday. February call option implied volatility is at 54, puts at 63; May calls are at 53, puts at 71; below its 26-week average of 89 according to Track Data, suggesting decreasing price movement.

MSCI Brazil Index (EWZ) closed at $77.03. Brazil Bovespa Stock Index closed up .70% to 70.729.34 according to Bloomberg. EWZ January option implied volatility is at 31, February is at 34, March calls are at 33, puts at 37; near its 26-week average of 39, according to Track Data, suggesting non-directional price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

More than 20 million people received unemployment benefits last year, a new record. While they didn't all do it at the same time, the activity was enough to run the unemployment rate up to 10%, leaving everyone with the belief hope that 2010 just has to be better.

The severity that has characterized the job market since the woes of American International Group (AIG) and Lehman Brothers made headlines in September 2008 eased up a bit as 2009 marched toward its conclusion. The layoffs slowed down a bit, but a dearth of hiring means that we aren't seeing a pickup for the 5.8 million who've been out of work for more than six months ... let alone everyone else.

Let's chalk up one of the first casualties to the salary limits imposed by the government. American International Group's (AIG) vice chairwoman for legal, human resources, corporate affairs and corporate communications, Anastasia Kelly resigned Wednesday for "good reason."

And what was that good reason? It sure seems that it's the pay restrictions levied by Kenneth R. Feinberg, the pay czar assigned by the Obama administration to monitor pay at companies that received taxpayer bailouts. At AIG, the 26th through the 100th highest-paid employees (along with the other firms) have had their cash salaries limited to $500,000.

American International Group (AIG) is holding onto its property/casualty division for a while. It originally planned to unload 20% of Chartis (formerly named AIU) via an initial public offering or through a private transaction involving institutional investors.

But CEO Robert Benmosche is concerned that he'd be giving up the operating unit at discount prices. Selling cheap to repay the government won't benefit anybody – not even taxpayers – so he's waiting until an appropriate price can be fetched.

More than a year after American International Group (AIG) reached the brink of collapse, insurance buyers are still using it to lay off their risk. A survey by Barclays Capital (BCS) find that 80% of commercial buyers use Chartis, the property/casualty unit of AIG.

Since the damage to AIG in 2008 was precipitated by the company's financial products group rather than its insurance operation, the use of Chartis to cover a company's risk isn't a problem, as the division has long been successful for AIG, regardless of the name used.

Christie's and Sotheby's (BID) were only able to pull in a combined $482.3 million on five high-profile art evening auctions in New York and London this year -- down 75% from 2008. Last year, the same collection of flagship auctions was good for $1.97 billion, which was off from the $2.4 billion record set in 2007. This year's performance still lags 2006's $1.1 billion aggregate tally.

From 2003 through 2007, the contemporary art market grew by a factor of eight, according to data from ArtPrice, yet the fun came to an abrupt halt in the fourth quarter of last year, thanks to the collapse of Lehman Brothers and the near-collapse of American International Group (AIG), which Sotheby's losing $50 million and Christie's $40 million, as pieces were unable to reach the prices guaranteed to sellers by the auction houses (a practice which has since been abandoned).

TheStreet.com's Jim Cramer says Goldman and JPMorgan are acting terribly amid all the offerings and deals.

Why do Goldman Sachs (GS) (Cramer's Take) and JPMorgan (JPM) (Cramer's Take), the good ones, go down all of the time or act terribly? I think because the equity offerings of the bad ones are just too compelling and the universe of buyers of this merchandise is severely limited.

These stocks are limited because they are not worth the headline risk trouble. If they weren't being bashed by the president or taken to the woodshed by Congress or dumped on by Meredith Whitney, the most powerful bank analyst on earth, then maybe they would be worth owning. But the more successful you are, the worse it looks. Is Goldman Sachs supposed to get into the home mortgage business? Is it supposed to write a check for $10 billion to the government as a thank you for AIG (AIG) (Cramer's Take)? Is JPMorgan supposed to start raising its dividend when it would be branded as a fat cat?

Were we all too fast to blame AIG (AIG)?

The insurance giant's role in precipitating the worldwide financial crisis has been covered at length since it teetered on the edge of disaster in September 2008, thanks to a series of high-risk transactions executed through its financial products group. Well, Goldman Sachs (GS), which has recovered quickly from last year's woes and is already figuring out how to pay some hefty bonuses, may have played a larger role in these transactions than everyone realized.