Lucian Bebchuk, "AIG Still Isn't Too Big to Fail," from the Journal.

I lack the technical knowledge to evaluate the question fully. But we should be asking the question. Is AIG really too big to fail?

That's the big question: because that, unlike the bonus drama, is where the real money is. AIGFP's potential derivative exposure stands at $1.6 trillion. And unlike the case with the big banks we're backstopping, the obligations we're covering are not what was supposed to be super-safe corporate debt.

These are derivatives, in many cases high-stakes bets on underlying assets the purchasers did not themselves own. So, you insure your house for fire damage. And I insure it too, even though it's not my house. Your house burns down and you get the policy payout to rebuild your house. But I just want my money because a deal's a deal. I have no problem with old-fashioned gambling. And if people want to play with their money this way, I've got no problem with that. But if the casino itself goes bust, don't come to me and talk about having moral claim on your winnings that I need to cover.

The policy question is whether not paying off these obligations will upend banks or other financial institutions we have an interest in keeping afloat. But perhaps there's a way to evaluate the different claimants through some sort of organized process or possibly pay off the money in the form of TARP infusions that at least get the taxpayer some equity in the company.

I'm not saying it's a simple issue. It's not. But under the current framework we could still end up giving AIG tens, even hundreds more billions of dollars.