The bonus is probably in a watertight contract, so Citi will end up paying it (unless Congress screams again).

But this type of “performance” bonuses are precisely what’s wrong with the whole system: say there was John Doe from AIG or BoA or whatever on the other side of the Citi trade. Is John Doe going to pay $100 million out of his pocket to share in the loss? I think not. He may get fired. So what? When presented with the odds, any sane, rational trader in this world would make a big trade if the probabilities were: 50% chance of making $100 million dollars, 50% chance of getting fired. I know I would.