Five months into his tenure, embattled American Insurance Group CEO Edward M. Liddy—who has become a public pinata in the wake of news that multimillion dollar bonuses will be paid to executives of his flailing, bailed-out corporation—had the misfortune of being scheduled to testify before the House Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises today. That’s a mouthful, but it’s a handful that the committee and the Congress in general is facing, given the mounting furor over the $165 million in bonus payments at AIG, which has received billions in federal money since 2007.

The pitchforks were out during a tense, packed hearing on the hill this afternoon. President Barack Obama yesterday expressed his deep distaste for the bonus arrangement, and the chair for the session, Democratic Pennsylvania Rep. Paul Kanjorski, likewise lit into Liddy and his cohorts in an opening statement: “We know that the executive at AIG are greedy and now desperate,” he said. “Every day that they are in control of those subsidiaries is a day that worries me.” He mocked the “AIG casino” and said that he found the bonus payouts to be unacceptable, given that AIG had, rather literally, “broken the bank.”

The federal government *has* fronted AIG a ton of cash—$70 billion from the federal reserve in 2007, $74 billion in loans from the Fed the next year, and $52.5 billion in TARP funds from late 2008.

But amid the jabs, Kanjorski made a policy recommendation of a sort: "The argument was that AIG was too big to fail, then it was that AIC was too interconnected to fail, and now it seems that AIG is too well-connected to fail. It’s about time that they were put into receivership." Kanjorski seems to be recommending a full government takeover of operations at AIG, in addition to being a majority stakeholder in the troubled insurance giant.

But can government accountants really do a better job than the "captains of industry" that landed AIG where it is? There is the argument that AIG executives are the few individuals familiar enough with the firm’s various entanglements to get us out of this mess—and Liddy, who penned a sorrowful op-ed in the WASHINGTON POST today, tried repeatedly to praise the financial products group of AIG for having wound down over $2 trillion in liabilities to only $1.6 trillion. And, in the earlier hearing, some GOP lawmakers, like Rep. Jeb Hensarling of Texas, looked for a little sunlight in the same place: Yes, "there are the crooked, the greedy, the foolish," he said—“and there are also the well-intentioned people who made mistakes.” But as Liddy wrote in his op-ed, those mistakes were "on a scale that few could have imagined possible." Further, under questioning from Massachusetts Rep. Stephen Lynch as to whether these bonus-getters are really the “only people” who are qualified to manage the future of AIG, Liddy conceded that they are not.

So why not hose the profiteers? Liddy, red, bluster-filled, and tailor-made for lawmakers glad of a scapegoat, didn’t make his case for why not. I am not one to support the breaking of contracts by Congressional fiat, but these are extraordinary times. And the sense of entitlement at AIG—especially given the bellyaching that accompanied the bailout of Detroit carmakers, whose workers made an “exhorbitant” $57,000 a year—more than justifies an extraordinary measure.

—DAYO OLOPADE