Let's face it: Wall Street is clueless about Main Street rules

President Obama was wise to get out front on this AIG disaster with a populist message on Monday condemning the troubled company for its ?recklessness and greed.?

?It?s hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay,? the president said.

Here?s something else that?s hard to understand. How does the federal government provide American International Group with $170 billion in taxpayer assistance without clearly establishing how the money would be used and not used?

Common sense suggests No. 1 on the list of rules would be: ?Bailout funds shall not to be used for bonuses, extra pay or anything, including coffee and Post-its, for derivative traders whose reckless behavior has now driven this company ? and the nation?s economy ? into the ground.?

But apparently that was too complicated.

Also hard to understand is how AIG?s lawyers outsmarted federal attorneys. The public is now being told that it?s unlikely the feds will be able to stop these executive bonuses and extra payments. The contracts are iron tight. Costly lawsuits will ensue.

Final score: Derivative traders 1, Taxpayers 0.

How can the masters of America?s financial universe still have such a tin ear when it comes to understanding how their actions are perceived on Main Street?

The AIG blowup comes just weeks after Wells Fargo, the recipient of $25 billion in bailout money, was pressured into canceling a lavish Las Vegas retreat for top employees. Before that, bailed-out Citigroup was forced to scrap plans to buy a new private jet.

Before that were similar stories of expensive trips, concerts and lavish office remodels, all done in the midst of economic crisis and/or federal bailouts.

AIG?s chief executive, Edward Liddy, is among those who clearly doesn?t get it. It showed in his letter to Treasury Secretary Timothy Geithner when he wrote that he had ?grave concerns? about the firm?s ability to retain talented staff people if, as Geithner insisted, these bonuses were renegotiated. Retention would be difficult, he wrote, ?if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury.?

By talented people, we assume he includes the brains behind the derivatives collapse. Would it be such a loss? Why are they still around anyway?

Someone needs to tell those at AIG that the rules have changed. They are confronting 2009 economic realities with a 1990s sense of entitlement.

And if President Obama doesn?t want to see his economic recovery plans collapse under the weight of this public relations disaster, he?s going to have to find a way to convince AIG and other firms to adjust to some simple rules of Main Street life ? such as, if you do good work, you may get to keep your job.