Plenty of investors have been calling for General Motors Corporation (NYSE: GM) to be removed from the Dow Jones Industrial Average (DJIA) as the automaker hovers on the brink of bankruptcy. But, like it or not, GM's rock-bottom share price isn't justification enough to oust the stock. GM still represents a major chunk of our industrial economy.

However, GM's nationalization would more than justify its removal from the Dow. After all, that's why American International Group (NYSE: AIG) got the boot last fall -- once the government took a controlling stake in the insurance giant, Dow Jones wasted no time adjusting its blue-chip lineup.

With pretty much everyone blasting the totally unearned bonuses at American International Group (NYSE: AIG), there was a need for someone to defend these poor bankers.

Describing the AIG-outage as "peasants with pitchforks, tossing around words like "communist" to describe people who are speaking out against rewards for failure, Rush Limbaugh came to to their rescue.

It's sort of weird that Limbaugh would decide to take up such an indefensible cause, but here's the rebuttal to his argument: Without these bailouts, those bonuses would be toast. They wouldn't have gotten paid their bonuses and they would have lost their jobs. So this isn't a question of government intervention with executive pay but really a question of whether we ought to use taxpayer money to reward people who worked at a firm that has since required $160 billion in taxpayer handouts.

Check out The Young Turks' dismantling of Limbaugh's argument in the video below.

General Motors (NYSE: GM) has convinced 6,000 of its UAW employees to take buyouts of their contracts, more than doubling Barclays Capital's estimates.

The buyouts affect 10% of GM's UAW-represented workers and come at a steep cost: a $25,000 voucher to buy a new car and $20,000 in cash. Now it's not that I begrudge GM's hardworking employees who individually had nothing to do with the company's collapse, but I have to ask: Is it really fair to write them checks for $45,000, with payments made by the United States taxpayers who had nothing to do with GM's collapse.

With the public at large indulging in a fit of righteous indignation over the bonuses at American International Group (NYSE: AIG), some of the fat cats actually have the nerve to fight back. From the Financial Times:

Senior executives on both sides of the Atlantic on Friday warned of an exodus of talent from some of the biggest names in US finance, saying the "anti-American" measures smacked of "a McCarthy witch-hunt" that would send the country "back to the stone age."

The New York Times reports:

One A.I.G. executive, who spoke on the condition of anonymity because he feared the consequences of identifying himself, said many workers felt demonized and betrayed. "It is as bad if not worse than McCarthyism," he said. Everyone has sacrificed the employees of A.I.G.'s financial products division, he said, "for their own political agenda."

Connecticut Attorney General Richard Blumenthal has been pawing through the data on American International Group's (NYSE: AIG) post-bailout bonus payments, and he's uncovered a bit of a discrepancy. Blumenthal says that the bonus payments totaled $218 million -- more than 30% higher than the widely reported $165 million figure.

Blumenthal said he isn't sure of the reason behind the discrepancy, and AIG denies that the discrepancy exists. Either way, Blumenthal isn't happy about it.

With American International Group (NYSE: AIG) blowing more than $100 million of its $160 billion bailout on bonuses for bad executives, Senator Chuck Grassley is pissed off and saying some pretty outrageous things. Grassley opined that AIG executives should "follow the Japanese example" and "take that deep bow and say I'm sorry" and then either "resign, or go commit suicide."

CNBC commentator Rick Santelli is blasting the payment of $100 million plus in bonuses to executives at corporate train wreck American International Group (NYSE: AIG), but he's also drawing attention to what a side issue it is given the thousand-fold larger pile of cash we piled into that hellhole of a company.

"I think it's reprehensible, but I think the bigger issue is we're giving a lot of talk to the $165 million towel rack . . . I would like to see greater scrutiny given to the $165 billion house we now own."

My, how a day of reaction can change things. Late last night, Treasury Secretary Tim Geithner announced that American International Group (NYSE: AIG) will repay the taxpayers up to $165 million that it doled out as bonuses.

According to Geithner's letter to congressional leaders, the government can't block the payments -- which were contractually agreed to before the government's bailout.

However, the public's "considerable outrage" over the payments was an epiphany for AIG, causing the bank to agree to pay the Treasury an amount equal to the payments. The Treasury will then deduct that amount from the $30 billion in government assistance that the company is slated to receive.

Another day, another item about excessive compensation. While American International Group (NYSE: AIG) pays out a ton of money to its own employees, the Hershey (NYSE: HSY) board has seen fit to bestow a rich compensation package to CEO David J. West.

Oh well, what can you do, I suppose. I always hate reading these reports. They always get under my skin. If you're a shareholder of Hershey, you're not doing that great right now. The stock will probably do well over the long term, but in the meantime, your shares are down over the last several years.

The United States taxpayer has bailed out American International Group (NYSE: AIG) to the tune of $160 billion -- so far -- but a huge chunk of that money has actually gone to a number of other firms that also received bailout money of their own.

The way it works is this: A big part of what got AIG in trouble was its role as counter-party in swap transactions, providing what amounted to insurance on dodgy debts -- loans taken out by borrowers with poor credit to buy homes at inflated prices.

The bailout has allowed AIG to meet its obligations to counterparties and the result is that the United States taxpayer's money has flowed through AIG into the following companies, just to name a few:

American International Group (NYSE: AIG), in yet another act of self-parody replacing the role of traditional comedians, has taken the unusual step of suing the United States government over a tax dispute -- at the same time that the company is holding $150 billion worth of taxpayer money and is set to receive another $30 billion.

Apparently that isn't good enough. The Wall Street Journal reports (subscription required) that AIG sued the U.S. over $306 million in taxes, interest and penalties. A company spokesman told the reporter that "AIG is taking this action to ensure that it is not required to pay more than its fair share of taxes."

From the taxpayer dollars at work department: Fresh off of receiving billions of dollars in taxpayer cash, American International Group, Inc. (NYSE: AIG) has decided that it will pay $450 million in retention bonuses to 400 employees in the financial products unit. That just so happens to be the part of the company that was involved with the credit default swaps that destroyed the company.

In a statement, AIG said that "We adopted and disclosed this contractual retention program months before the government provided support to AIG. We did so because it was clear, given the market environment, that we would need to retain employees to manage the complex issues arising in our Financial Products business, which we are now unwinding."

The taxpayer-funded bailout of American International Group (NYSE: AIG) just wasn't rich enough at $123 billion. Oh, and the terms for repayment were just a little bit too tough apparently.

The Wall Street Journal reports (subscription required) that the company has reached a deal with the government to replace that package with a new $150 billion plan. Here's the quick summary: "Under the terms ironed out late Sunday, the government would give AIG more money, including $40 billion from the U.S. Treasury's $700 billion Troubled Asset Relief Program. It would also receive less interest than on the bulk of the original loan, while freeing AIG from exposure to some of the risky financial instruments that nearly caused it to file for bankruptcy protection."

Wow. The government will not be increasing its stake in the company beyond the 79.9% it acquired in the original deal. The original $85 billion, two-year loan will be replaced with a five-year $60 billion loan -- with an interest rate that's 5.5% lower at LIBOR plus 3 instead of LIBOR plus 5.5.

What is difficult for me to understand is why the company's common stock holders are being allowed to retain any interest. Without the government, the company would surely have plunged into bankruptcy now and shareholders would have been wiped out. If saving AIG at the expense of taxpayers is necessary for the health of the financial system, I understand. But why does the bailout have to stuff cash into the pockets of stock market speculators? That's wrong. If the market for the distressed assets we're buying doesn't improve, taxpayers could stand to lose billions of dollars. It just seems obvious that a situation so desperate that it requires the Treasury to speculate on obscure securities shouldn't also provide an opportunity for shareholders to make billions.

The financial crisis is not over. If things were back to normal, banks would be lending to each other and to businesses and individuals. But measures of bank lending risk suggest fear is 12 times as high as it would be in normal times. The reason? Banks know more than you do about what's wrong. And they're not talking about it because they don't want you to withdraw your deposits and sell your stock. What they know is that on October 21st, some of the biggest players on Wall Street could be required to come up with $400 billion that some may not be able to pay.

Last month, the White House decided that we could afford to let Lehman Brothers file for bankruptcy. That proved to be an enormous mistake. It triggered a run on money market funds because one of the oldest such funds, Reserve Primary, broke the buck since it held Lehman Brothers paper. The U.S. responded with a $50 billion guarantee of money market funds. But the biggest consequence of that mistake is in the $54.6 trillion market for Credit Default Swaps (CDSs).

A CDS is like selling insurance on your car to hundreds of people who don't own it -- yet if your car goes up in flames each of those people collects the full value of your car. More specifically, CDSs are insurance against a bond or loan default. Why are CDSs so dangerous? Three reasons: a CDS seller does not need to put any capital aside to cover losses if the security defaults, the buyer doesn't need to own the asset it wants to protect, and there is no central place where information about all these CDS deals is collected and updated.

The banking system has been crumbling for over a year, but last month's collapse of American International Group (NYSE: AIG) -- which prompted an $85 billion government takeover -- suggests that insurance is not immune from the problems. As a reminder, AIG got snared in the $62 trillion Credit Default Swap (CDS) market whose growth was spurred by McCain advisor, Phil "Americans are Whiners" Gramm.

And as insurance crumbles, banks keep suffering. Bank of America (NYSE: BAC) and National City Corp. (NYSE: NCC) are both hurting. How much?

• Bank of America's earnings plunged 68% to $1.18 billion, or $0.15/share -- missing by 60% analysts' forecast of 62 cents. Bank of America will raise capital by selling $10 billion of common stock and slashing its dividend in half from 64 cents to 32 cents. One analyst cut the bank's 2009 earnings estimate to $2.50 per share from $3 per share -- this is well below the $3.12 per share from a Thomson Reuters analyst poll -- and lowered his price target by $2 to $26.

• National City Corp. and its National City Bank both suffered debt downgrades from Fitch. For instance, Fitch slashed the bank subsidiary's long and short-term Issuer Default Ratings (IDR) to A- from A. And it lowered the bank and holding company's Individual rating to C from B.