Politicians on Capitol Hill have done their very best to muster up an acceptable amount of rancor over the AIG bonus checks that went out last week. Ironically, the gang of 535 are more interested in getting back $165 million than finding out where the TRILLIONS in Federal Reserve ‘gifts’ to big banks, brokerages, and other financial institutions have gone.

There is no need for any of this political grandstanding. The US Government owns a near 80% stake in the failed insurance company and as such could simply retract the bonsuses through a shareholder action. There is no need for hand-wringing, negotiations, or incessant hearings on Capitol Hill.

Secondly, the chief of AIG insisted that “when you owe someone money, you pay it back” referring to the fact that these bonsuses were contractual agreements. However, the Congress has had no problem suggesting that bankruptcy judges modify subprime residential mortgages (which are also contracts), so the small matter of the $165 million shouldn’t be an issue from a contractual standpoint.

Perhaps most importantly, the AIG bonus situation is non-issue in comparative terms and is meant to absorb the public’s outrage while the vast majority of TARP and other Fed disbursements go unaccounted for. By my calculation, the $165 million is exactly .61% of the money that has been spent in the people’s name so far (that we know about) in dealing with the financial crisis.

The hystrionics of both political parties are a nice piece of acting, but should further establish that they are much more interested in protecting the status quo than the US taxpayer.