Call To "Open Source" AIG Investigation

VValdo writes "As you may recall, the citizens of the US shelled out about $85 billion to bail out AIG and its creditors (Goldman Sachs in particular) last year. But as 80% owners of AIG, we still don't know what happened, exactly. That may change. In a new op-ed piece, former prosecutors (including former NY governor Eliot Spitzer) are calling for the US Treasury to force AIG to release its treasure-trove of emails to the public before allowing AIG to 'break free' of our control. As the prosecutors put it, 'By putting the evidence online, the government could establish a new form of "open source" investigation. Once the documents are available for everyone to inspect, a thousand journalistic flowers can bloom, as reporters, victims and angry citizens have a chance to piece together the story.' Good idea?"

Comments

Rigghttt...

[Anonymous Coward]

That's a good one. Goldman Sachs and Lehman Bros ARE the government.

Re:Rigghttt...

[iluvcapra]

Lehman no longer exists, so I guess that makes us a one-party state? :p

Re:Rigghttt...

[jcr]

No, Goldman just owns the president and most of the congress. Having lackeys isn't the same as being the lackey.

-jcr

Yes.

[selven]

We own 80% of AIG, so 80% of AIG is technically part of the federal government. That means we should have open access to everything just like we should have open access to the Congress, senate, court system, etc.

Re:Yes.

[HeLLFiRe1151]

My mortgage company owns 80% of my house but I don't want them coming in whenever they feel like it. Yes, shareholders should know some things such as pay, retirements, investments and investigations. If you opened up everything and every secret you are just giving an advantage to your competitors, who don't have to disclose certain details of their business.

Re:Yes.

[tuxgeek]

The American political system has evolved today into one that the only people capable of buying their way into congress are the Donald Trumps and Bernie Madoffs
Once in there the only legislation passed are bills that favor them and the wealthy class

The best example I can think of right now is the Health Care reform clusterfuck. The root of our problem is the insurance industry. They are raping the system and all citizens and are the cause of the escalating costs of medical care. So what do our representatives do? They move to require all citizens to buy insurance or face a fine for not being wealthy enough to afford it. Does anyone really think people working at walmart can afford insurance if it isn't given to then as a benefit? The insurance industry is the same as the financial industry. Controlled and run by greedy corporate scum like Madoff.

I say sack them all and start over with a clean slate. I'm not the only one thinking violent revolution may be our only way out of this quagmire. I hear this idea more each day from people on the street. Those that have lost their homes and/or life savings and now watch as we fork over billions of public tax dollars to the scum responsible.

Not a good sign

Re:Yes.

[FiloEleven]

The root of our problem is the insurance industry.

That's an awfully simplistic explanation. I am very much against the current health care legislation for a number of reasons including the one you mentioned, but the truth is that the problem has many roots; including the insurance industry, hospitals, government, and patients themselves. NPR's This American Life did a show on it that highlights the complexity of the issues. There's plenty of blame to go around and IMO the insurance companies deserve less blame than government, which through wage freezes essentially kicked the insurance companies from a primary market of individuals to a market of corporations. Hospitals vary their charges (sometimes by a factor of 10) for identical procedures depending on how many patients use that insurance company. Doctors are afraid of liability if they don't run a requested test even if it's in the patient's best interest to remain untested.

The health insurance industry doesn't get off easy--there's a second show devoted entirely to it. It's a huge mess. But here's the thing: they're not really like the financial industry. They seek profits, like everyone else, but they have been demonized. Their hands are tied by hospitals, and they are left with the choice of raising premiums for everyone or dropping the policies of people in areas where they have little clout with hospitals. IMO their biggest failing is that they don't care about the patient: they approve lots of unnecessary procedures because much of their profit lies in the volume of claims they process.

"Clusterfuck" is an appropriate term, because it's a whole lot of things gone wrong all at once. Without having a clear understanding of the problem, you can be sold a bill of goods like the current legislation. You've seen through this bill, but enough people haven't that it's still creeping along. It's important to get the shape of the problem so that if we get rid of this bill it won't be replaced by something equally awful.

Re:Yes.

[AK Marc]

If we have "universal" health care, then insurance should go away. I couldn't find how much of premiums went to actual services, but it, from a glance, looked like it was about 10% loss between overhead and profit. So, if we abolish insurance, and just have payment come from the government in all cases, with no claims adjusters, just fraud-prevention, it should cut more than $200,000,000,000 from our national costs of health care. I know that's a small number, but every hundred billion helps.

A unified systems of risk management with limitations on liability will have those that need tests get them, and those that don't need them not be given them. One of the highest rising parts of health care is the tests. There are more, and they are expensive. And everyone getting them because their doctor doesn't want to get sued is wasting money.

And, of course, another way to keep costs down is to reduce work on those with less life left. The costs are increasing because there are more old people. Death can't be prevented, no matter how much is spent. Work on making sure the quality is good, and less on preventing it for those that are headed there because of age. But that's considered political suicide because of the AARP voting bloc.

So yes, there are factors, and insurance is a big one out of it, and not the only one. But it's an easy target and should be a good starting point.

Re:Yes.

[gestalt_n_pepper]

The explanation is simplistic. The solution is not. Single payer systems like Canada's work in virtually every other capitalist democracy. Are they perfect and trouble free? No. Are they better than ours? It would seem so (http://en.wikipedia.org/wiki/Health_care_compared#Cross-country_comparisons). Saying that this wouldn't work *here* is just a way of saying that Americans are too stupid and lame to do what virtually every other advanced industrialized country has done.

The simple, logical, thing would be to adopt a proven system that already works. That's not happening. Guess why?

Capitalistic democracies survive as such until the most successful capitalists (e.g. banks, insurance companies) determine that the most profitable thing to do is purchase the government. In the USA, this has happened. Our legislators have been bought. Our media has been bought (http://www.mediachannel.org/ownership/moguls-printable-150dpi.pdf) by many of the same organizations.

I would love to see the emails and financial records of all publicly traded companies forced to go open source, worldwide. I am dead certain it won't happen.

Keep Dreaming

[arcticinfantry]

This will *never* happen. GS is far too powerful to let that happen. The AIG bailout was quite simply a giveaway to GS.

Re:Keep Dreaming

[arcticinfantry]

Yeah, but there could have been some bargaining on the govt's part regarding a percentage of remuneration. I think one of the AIG creditors (foolishly) mentioned they'd accept something like 95 cents on the dollar. All debts were paid in full. It's easy to do that if you've got a blank check in your hip pocket from the govt. BTW, CDS's are *not* insurance. FWICT, they're just a device to allow CEO's to fool themselves and stockholders into thinking the company has no liabilities.

Re:Keep Dreaming

[maxume]

Insurance businesses are regulated in such a way that they are not supposed to go bankrupt, AIG managed to avoid those regulations and become bankrupt (but the government chose to dump money in rather than attempting to resolve it through the traditional process).

Re:Keep Dreaming

[maxume]

It's likely that they could have pushed the haircut issue, but the banks that got the money were not the ones that would lose on the insurance contracts (for instance, Goldman only stood to lose $14 billion if AIG completely exploded, AIG's customers stood to lose hundreds of billions, so the government would have been depending on the generosity of the creditors (if they were willing negotiators), or doing even more damage to contract law (if they were unwilling)).

No

[cheesybagel]

No, not a good idea. What is the point in having a Cultural Revolution? Better to just split these companies which are too big to fail into smaller chunks, kick out the top management making sure they never work in that capacity anymore, enforce layers of separation between businesses and let them free. Restore the Glass–Steagall Act and separate commercial banking from investment banking.

Re:No

[Anonymous Coward]

We need that and a 'Cultural Revolution' that fights back against the idea that the upper class knows what's best for the rest of us and that any attempt to eek out even 4% more of their wealth from them is not socialism at all.

Re:No

[arcticinfantry]

Yeah, nice idea, but you'd need a legion of Paul Bunyan's to do that. Obama would probably chop his foot off on the first swing.

Re:No

[trout007]

You have it completely backwards. I'm a libertarian but the one place the socialists have it right is that "some" of the rich steal it from the "workers". The problem as I see it with the socialists is that they don't distinguish how people get rich. There are people that get rich by making things that people value ie, computers, software, entertainment, machines, goods, services. Then there are those that actually steal it which are the bankers, lawyers, and investment houses. The bankers steal it because they have had laws written that allow them to create money out of thin air and lend it with interest. What happens when money is created out of nothing is a little bit is stolen from everyone holding that currency by inflation. So they can become famously rich without doing anything of value. And of course they gamble that money they created at 30 to 1 leverage which makes them even richer. And when the whole gamble fails to pay off they just run to their lawyer friends in DC and get bailed out claiming that if they go down so will the country. Well I call BS. If they were allowed to fail we would have a serious deflation with all of their fake money getting destroyed. As long as minimum wage laws were repealed all prices would drop and those that were thrifty and saved money would do much better because those dollars would be worth more. But of course we can't have that so the Federal Reserve creates even more money (stealing it through inflation) to give to their buddies.

Re:No

[Rich0]

Well, the dicing up will limit the power of individual banks.

However, you are correct that the problem was that EVERYBODY was acting stupid. The problem is that when all your competitors are making risky loans and selling them to investors as safe loans you have two choices:

1. Do the same thing.
2. Watch all the investors pull out all of their money and give it to those who do #1.

After all, if you're an investor, which fund would you invest in? The AAA bond fund yielding 15%, or the AAA bond fund yielding 5%?

A big problem is that individual investors are far too insulated from the investment decisions. Most people have a choice of maybe 20 mutual funds in their 401k - usually from one or two investment houses. At best they get a quarterly statement and some audits. Nobody really works for the individual investor in such a setup - the funds make their pitches to their employers. People are told to just set aside 10% of their income and watch it grow, and that investments are too complicated for them to deal with. Nobody is accountable when things go wrong.

The free market only works when consumers can make educated choices. That is why there was a ton of regulation after the 1929 crash.

Re:No

[causality]

I agree, the public is just going to crucify the company. We need to move forward, fix the problems, and make sure they don't happen again.

On the other hand, this might be a great learning exercise for academia. It might be nice if accredited institutions could review a portion of the details in the interests of study cases; particularly a business ethics class (no that's not an oxymoron).

Business ethics: if it's legal, do it for short-term profit with no regard for side-effects, long-term losses, or harm that it might cause to other people. If it's not legal, grease the right palms until it becomes legal.

Re:No

[arcticinfantry]

I'm with you. I think having banks that are nation-wide is very risky. Having that much cash in one place invites all sorts of corruption (the ultimate example being the federal government). My current bank is getting rather large through mergers and expansions and it has me worried. I'd support breaking banks into regional/state entities.

Re:No

[Znork]

However, you are correct that the problem was that EVERYBODY was acting stupid.

Fundamentally, the Fed was forcing everybody to act stupid. Central banking works by artificially changing rates outside actual market rate. That the function by which the Fed can dictate that, either you "invest" (speculate), or your money gets eaten by inflation (the actual which has little to do with normally reported numbers).

The thing is, it's not that investors are insulated from investment decisions, it's that they have no control over the game either way. They, or their representatives, do what they're told, invest in whatever bubble the Fed blows, or they get reamed anyway by funding the bill for the crash. There may not be an educated choice to make, everyone may know that it's a bubble that's gonna crash, but either you're in on it, or your money gets depreciated anyway.

Re:No

[wons0000]

"What happens when money is created out of nothing is a little bit is stolen from everyone holding that currency by inflation." -Yes but only in the short term. This is not a 0-sum economy. The inflation would be offset with growth in the economy....the question is how long till things even out. The myth of the whole economy downturn is only a few reaped its benefits. The top brings the middle (and some times the bottom) with it when it grows. Main street doesn't exist without Wall street....at least not in its current form. The idea that the people who create "money out of thin air" do nothing of value is false. A modern economy needs credit to sustain its self and more importantly, grow. "Restore the Glass–Steagall Act and separate commercial banking from investment banking." -much better idea then any kind of re-distribution of wealth or some other non-sense.

Re:No

[linzeal]

As an engineer and inventor I disagree. Sometimes corporations utilize their power ( money, markey position, etc ) in any industry to steal from the workers. Look at Intel, imagine how real competition would of lowered prices over the past 10 years and what we could of done with that money.

Re:No

[Gorobei]

Um, I write software for an investment house. Where do I fall on your libertarian scale of social value?

Re:No

[10101001 10101001]

The bankers steal it because they have had laws written that allow them to create money out of thin air and lend it with interest. What happens when money is created out of nothing is a little bit is stolen from everyone holding that currency by inflation. So they can become famously rich without doing anything of value.

Not quite. The major problem in the current situation is because bankers have started including investing houses. Banking is supposed to provide reliable, low-interest, low-return loans as a stable basis for inflation. Inflation is supposed to encourage investment and debasing of the currency of the rich over time, especially for those who would sit on money instead of investing; ie, inflation is intended to encourage economy growth instead of risking periods of economic stagnation.

And of course they gamble that money they created at 30 to 1 leverage which makes them even richer. And when the whole gamble fails to pay off they just run to their lawyer friends in DC and get bailed out claiming that if they go down so will the country.

And that's the problem. Banks becoming investment houses has resulted in the mixing of safe and wildly unsafe loans. The result is that to support the general population through common bank loans, it was necessary to subsidize wildly unsafe loans. The main problem now is that with the emergency over, there should be immediate efforts to dissect the bank into investment and banking operations. This really should have started as soon as December last year.

Well I call BS. If they were allowed to fail we would have a serious deflation with all of their fake money getting destroyed. As long as minimum wage laws were repealed all prices would drop and those that were thrifty and saved money would do much better because those dollars would be worth more.

Deflation is more or less the worst case scenario. Instead of investing, people would simply save their money. Those with outstanding loans (ie, most small businesses) would have to sell at lower prices, resulting in even greater difficulty in paying back their loans, and making it harder to buy the same size stock of items, let alone any sort of expansion. Adding on repealing minimum wage laws would make it worse, by removing the masses regular spending money. Such would merely accelerate the deflation.

Would people with savings be better off? Sure, I guess. But, that's a relative term. If 50% of the farms go out of business because so few people have any money to spend, you'll be the one of the few people with enough money to buy a steak. But, being the one eyed king in the land of the blind isn't really a great place to be in, overall.

But of course we can't have that so the Federal Reserve creates even more money (stealing it through inflation) to give to their buddies.

That's the limit of the Federal Reserve's actual power (well, and changing the interest rate, but that mechanism was already screwed by Greenspan and Bernanke's unwilling to raise the interest rate during relatively economically prosperous times*). While it can be argued that the current and previous chairman of the Federal Reserve encouraged the deregulation and merging of investment houses with banks (which is a good basis to fire Ben Bernanke), invariable it is the Congress who actually passed the deregulation laws, ignored warnings about derivatives, and has still failed to act to further the separation of investment houses with banks. Congress, and generally deregulation minded individuals, have turned banking from a stable, progressive debasing of the currency into a rapid expansion of the economy coupled with catastrophic economic circumstances when over-leveraging can not be handled by the built-in mechanisms that were created for low-risk, low-fail-rate loans.

In short, rallying against the Federal Reserve on its principle function is lu

Re:No

[MightyMartian]

Could you point out where Capitalism is in the Constitution, and where Socialism is banned? Thanks in advance.

Re:No

[TubeSteak]

I'm a libertarian

The fact that an ideologues like Bush Jr. & Dick Cheney went ahead with the bailout should tell you what a bad idea "let them fail" is.

Re:No

[mjwx]

You have it completely backwards. I'm a libertarian but the one place the socialists have it right is that "some" of the rich steal it from the "workers".

Unfortunately Libertarianism is the fungus in which this behaviour grows.

A completely unregulated (anarchistic) capitalist system fails for the same reasons a completely unregulated (anarchistic) socialist system fails. It relies on everyone thinking the same and following unenforced and unwritten rules, the system breaks down when one person decides to act differently. With libertarianism it is only a matter of time before one company becomes a complete monopoly as they can continue to buy out, suppress or undercut other companies until they are bankrupt as they are permitted to leverage any advantage to any extent. Once this happens we have a two party system essentially, the corporation and the state, what happens here is the two begin to merge into one entity, a extremist authoritarian capitalist system (fascism) where the entire state works for the benefit of a small group (the fasci).

This is similar to what happened with Pol Pot. He and his cohorts envisaged a utopian agrarian state, however many Cambodians didn't so the regime set about forcing people into this idealistic existence, to the tune of 2.2 million Khmer dead.

If it weren't for regulation of essential economic sectors/industries this kind of scenario would have already happened. This is why the Australian economy with it's well regulated banking sector was the first 1st world nation to recover. Hard-line socialism inst the answer, neither is hard-line capitalism, it's about maintaining a healthy balance between financial growth and financial security.

Well I call BS. If they were allowed to fail we would have a serious deflation with all of their fake money getting destroyed.

The problem is that the debt is very very real, yes they created that debt with the Imaginary Dollar (which henceforth shall be refereed to by the symbol !$ symbolising that it is indeed not a dollar) but this bought real investments, this needs to be paid back with real dollars. The banks and the US economists gambled on the returns from the !$ in real dollars being greater then the repayments on the !$ borrowed to buy the investments. Basically they gambled on a continued and unsustainable level of growth and lost, this does not mean the money borrowed does not have to be repaid.

If the US banks were permitted to fail the US would be a third world nation by now as you debtors hunt your mercilessly. However I don't understand why the CxO's responsible aren't in jail, yes the law permitted them to do this but they should have understood the consequences (Hint: they ignored the consequences, this is another example of how libertarianism fails).

But of course we can't have that so the Federal Reserve creates even more money (stealing it through inflation) to give to their buddies.

Inflation is the hidden tax, this is often raised when actual taxes cannot meet expenditures. So very often a tax cut offered as an election promise only serves to raise the hidden tax, inflation. This was the case in 2008 as Kevin Rudd delivered a bunch of small tax cuts after winning the election. Inflation is also quite inefficient compared to direct taxes.

Wonderfull Idea

[Anonymous Coward]

Put PJ in charge! :)

Hrmm

[acehole]

Unlike movies, the guys in high places taking home the multimillion dollar salaries 99% of the time dont get caught. They cover for each other.

Sad fact of life,

Re:Hrmm

[kmac06]

Unlike movies, the guys in high places taking home the multimillion-dollar salaries 99% of the time don't do anything wrong.

Happy fact of capitalism.

The Risk

[Anonymous Coward]

As purported owners of 80% of AIG, shouldn't taxpayers also be concerned that the information released could compromise the viability of their investment necessary to regain their lost billions?

I'd love to know what happened but I also want the money they took from me plus an onerous amount of interest. I think the interest will discourage them (and anyone who looks up to their executives as examples of how to rape taxpayers) from repeating their greed/mistakes. Of course what they really deserved was to sink like the anchors they were... Seriously, if you divide the TARP bailout money it comes out to $20,000 per US citizen. My savings and investments can't cover that level of corporate charity disguised as taxes.

Re:The Risk

[nedlohs]

Sure, if you ignore the simple fact that TARP just put a band-aid on. So in the next couple of years we'll get to pay for the real collapse as well.

$2,333 per person to delay and compound something for a few years doesn't seem so wonderful to me.

If gov funded research has to be published why not

[Dr_Ken]

this stuff too? Who pays the piper calls the tune. I have to sign away exclusive publishing rights to any work I do with gov funding (no matter how peripheral or limited) if I accept it. AIG should get no waiver on that score either imho.

Re:Superheroes

[countertrolling]

A corporation's, or any other authority's "right to privacy" should be much more limited than it is. And even more obviously, we shouldn't be giving it rights as a person. What an absurd concept! But since we always try to put a human face on everything, from god on down, it seems inevitable. And vigilantism becomes inevitable when the confines of the law aren't applied equally and the system breaks down.

Ummm...

[Anonymous Coward]

We know exactly what happened... a few *idiots* in AIG's derivatives trading department thought they could sell credit default swaps on mortgage backed securities without keeping *anything* in reserve. It's actually a great strategy... unless housing prices go down, in which case you will take huge, mind-boggling losses. Essentially a few people in one department of an otherwise well run institution took down the whole thing by drastically underestimating risk.

Credit default swaps are an insurance product. If you sell them, then you had better keep proper reserves to cover claims AND you had better buy reinsurance in case there is a market downturn. AIG did neither and went kaput.

Re:Ummm...

[mbone]

We know exactly what happened... a few *idiots* in AIG's derivatives trading department...

Sorry, but I don't buy it. My experience is that idiocy generally starts at the top, but it doesn't really matter. Like the Captain of a ship, the people at the top of a company should be responsible in any case, even if they didn't know.

Re:Ummm...

[arethuza]

These guys were anything but idiots - one guy at AIG's small London office (which lost over $500 Billion!) walked away with over $280 million in salary and bonuses. http://abcnews.go.com/Business/story?id=7045889&page=1

Open Source the Whole Industry

[Anonymous Coward]

This is a great idea, but it is POST-crash thinking. That's how prosecutors think: They wait for something bad to happen, see blood in the water and then look for the crime. Certainly this is a part of how regulation must happen.

But, there is an even more powerful, I would say way more powerful, idea lurking behind what they are considering: Why not "open source" the whole industry? For example:

  o Have open source analytics that measure risk and values and apply those analytics against firm positions to show aggregate exposures and stress values? The recent "stress tests" that were performed against the banks were generally considering quite weak by industry standards. For example, they were based on single scenarios being applied against option-like positions. And, the scenarios were simply housing and interest rate related but not further defined by prepayment and default models. A full analytics package applied with monte carlo methods would give a much more robust answer of the true risks. Shouldn't we know exactly what exposure all large firms have? If the market has much more information on the risks that various firms are taking, it will be much easier to reward good decisions and punish bad ones.

  o Force all firms of a given size to publish their largest counter-party exposures on a daily basis. If I own BAC and they are long AIG, shouldn't I as a shareholder be able to see the exposure? Shouldn't anyone be able to see that, for the benefit of the whole? If you produce enough of the counter-party graph connectedness, the market will have much more information on system stability and be able to punish/reward bad/good decisions.

  o Shouldn't we be able to see prices of ALL transactions that occur in the capital markets? This is a pretty simple database: CUSIP, Date/Time, Amount, Price. Currently members of the public can only see corporate and (I believe) muni prices. What about MBS/ABS/CMBS/CDO/CLO etc? Also, for OTC transactions there could be other databases that show counter-parties, etc.

  o How about seller transparency in fixed income markets? If an MBS deal is coming to market, shouldn't the buyers get access to all material information the sellers have? This would allow for a market where the buyers can actually price risk without massive information asymmetry.

  o Getting back to open source analytics, having such analytics (paid for by the large financial firms and produced by independent modelers) would greatly help the fractured buy-side firms who simply can't otherwise compete with the large firms that develop sophisticated, proprietary analytics.

If you want to open source the capital markets, there are many, many things you could do that are proactive and would lead to much greater transparency and stability.

Re:Open Source the Whole Industry

[arcticinfantry]

But that would ruin the whole purpose of CDS's!! Where would a CEO be able to rat hole liabilities to improve the balance sheet!

Re:Open Source the Whole Industry

[jonaskoelker]

MBS/ABS/CMBS/CDO/CLO

How many times do we have to go over this? It's GNU/MBS/ABS/CMBS/CDO/CLO...

Wait, what were you talking about?

It is a great idea, but...

[WindBourne]

Lets break them up. The last thing that we need is have companies that are 'too big to fail'. We need more competition. If these companies that 'required' and accepted help, then we should break them up into at least 3 companies so that if any are ran into the ground again, we let them die.

Of COURSE it's a good idea

[popo]

As many accountants have said: Show me a company who does not get audited, and I will show you fraud.

There are only two options here:

Option1: We the People get ripped off.
Option2: We the People are allowed to see exactly where OUR money went.

All other options are Option 1 in disguise.

Wasn't this technique used already

[lamadude]

during this year's big UK politicians expenses scandal? All citizens could look over the lists of expenses and find the abuses. I'm not from the UK, so I don't know how this story ended, perhaps somebody from the UK could fill me in?

Not quite

[SlappyBastard]

Being 80% owned does not integrate a corporation into the entity that owns it. Trust me, Verizon has been using the exact theory for decades to lock Verizon Wireless workers out of the main Verizon company's collective bargaining agreement. Also, ask the Rigases (who owned Adelphia) if full ownership entitles you to complete run of the company -- it can be a jailable offense if you go about owning the company you own to aggressively.

A stockholder company has a wide range of fiduciary issues. It's very likely that if the government, as 80% owner, tried to force corporate secrets into the open that the other 20% could sue them for abandoning their responsibility to the company.

Re:Not quite

[Ramze]

Nope... you and whomever modded this as +5 informative needs a course in business law. Owning 51% or more in a company gives you complete and unquestionable authority over what actions a company can take unless a signed contract says otherwise or your shares are specifically "non-voting" stock. If the Fed. govt. as 80% owner decided to release all documents or even liquidate the company, the owners of the other 20% would have no say at all and no legal recourse.

Re:Not quite

[Late Adopter]

Neither of you cited your claims, but I'm fairly sure it's actually the GP who has it right. Dodge v. Ford established that even a majority shareholder has some basic responsibility to the minority holders, which would preclude actions that would harm the shareholders for no clear benefit to the company. This is sometimes raised out of context on Slashdot to falsely claim that a business must by law maximize profit, but the basic principle is of a similar vein: you can't just water down the value of your shareholder's shares for nothing (as in the Ford case).

Open source "investigation"

[The_Duck271]

You mean, like the open source "investigation" of the leaked climate change research group emails? That turned out well...

It's a start

[mbone]

I have no doubt that there is a lot of dirty stuff in those emails, so releasing them would be good.

Since clearly not everything could be released (HIPPA stuff, personal bank account numbers, etc.), this raises the question of who would remove the private information, and whether they could be trusted. Clearly, if this was done by AIG, an amazing amount of stuff would presumably be declared personal and private and not for release.

not only

[phrostie]

not only is it a great idea, it should have been a requirement before the bailout.

This is an insidious suggestion.

[steve buttgereit]

While it is certainly easy to suggest something like this for those evil people at AIG, it presupposes that those good prosecutors and men at law that would protect us from such evil themselves are actually good. In truth the situation is much more grey than that. Firstly consider that many prosecutors in the country are elected and the prosecutorial policy is originates in the politics of the various office holders. Are politicians so indifferent to their own self interest that such a policy as being proposed by the article could be executed in good faith? Of course not. Politicians, and those that serve at them, are as notorious as any 'fat cat' in using their position and power to their own benefit at the expense of the others. All this policy does is feed a sort of populist anger that garners political support for those that suggest it and at the expense of real justice for the small minority that it targets... regardless of their past transgressions. One should remember that enshrining rights, such as prohibitions against search and seizure without convincing a court, exist largely to protect minorities from majority exploitation.

The real sin in the AIG case, to be fair, was not any action of AIG at all. It was that we bought into the bogus notion that a firm can be 'too big too fail' and must be bailout out by Government. AIG made bad judgments and bad investments and its owners (shareholders, including big investment banks) allowed it to be managed poorly. The company should have been allowed to fail, something all those involved earned. What we did instead was reward the foolish risk taking made by the shareholders and the managers and, worse still, told future generations of shareholders and managers that taking these risks is OK... the government will bail you out if you lose so there really is no risk at all... you're too big too fail. Let em fail! Stop taking my savings, diluting my money, borrowing on my behalf to save businesses that by all rights have earned their failure (including all those that chose to have a business relationship). There are other insurance companies, there are other investment banks, and there are others capable of filling the gap responsibly. Sure none of them have such good friends as Geithner, Paulson, Obama, & Bush... but they can rise to the occassion.

Re:Will this be like the CRU emails?

[Anonymous Coward]

Here's hoping the AIG e-mails don't have an internet defense team consisting of bloggers plugging their ears and saying "la-la, I can't hear you".

That's what they do whenever you point out that this was an engineered, deliberate economic crisis. Or that fiat currency based on fractional reserve banking is inherently unsustainable and absolutely must have an ever-growing amount of debt attached to it. I think the people who are capable of realizing the truth of these things have already done so, and an attempt to share this knowledge with anyone else just leads to dismissal without examination. No evidence is ever good enough when the person is naive, cowardly, in deep denial, or otherwise just doesn't want to believe that a few puppeteers can manipulate and micromanage both our political and economic systems despite the multitude of signs and abundance of evidence that this is so.

It's sort of like when Galileo tried to convince the Church to look through his telescope; he was right, but he was offering evidence of something that the Church just didn't want to acknowledge. So naturally the Church tried to discredit, marginalize, intimidate, dismiss, stigmatize, pretty much anything other than examine his evidence. Just like you guys do when someone points out the social and economic engineering that should be obvious and you respond by calling him a conspiracy nut.

In the old days, you had to take someone's money from them by force or fraud in order to steal from them. That model is now obsolete. Through inflation, the powerful can steal the value of your money without ever taking one cent out of your pocket or bank account. For the thieves, this has the added bonus that the average American is so stupid that they don't feel victimized when this happens, not like they would feel if a mugger pointed a gun at them and said "stick 'em up".

Let me guess, I suppose none of you find it strange or noteworthy (or obvious like a sore thumb) that public (government-run) schools generally do not teach the well-known fact that under the Federal Reserve system, dollars represent debt and not wealth. They don't teach that if all debt were paid off there would be no money in circulation. They don't make it clear that when money is created out of thin air and has interest attached to it the moment it is created, there is not enough money in circulation to pay off all debt. They especially don't explain that this puts our government into a debt cycle that is like a downward spiral. The only thing it can do is borrow money, and then borrow more money to pay off the interest on the money they borrowed, and borrow more money to pay for the interest of that, etc, until there is so much debt that foreclosures and bankruptcy and who has them become only a game of musical chairs. Isn't it "odd" that during the entire 12 years of public schooling, they never once find a few moments to mention important facts like that?

Strong individuals can do their own research, process their own information, and obtain their own understanding. Helpless sheep need someone to both provide and interpret information for them. If the only thing you know about how our society operates is what they tell you in school and in the media, then you my friend are part of the problem. Sheep demand a shepherd. Individuals demand freedom. Freedom includes an honest economic system based on representative currency; otherwise, debt becomes a slightly nicer way to enslave people than men with guns.

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[account_deleted]

Comment removed based on user account deletion

only too true

[gadget junkie]

No, not a good idea. What is the point in having a Cultural Revolution? Better to just split these companies which are too big to fail into smaller chunks, kick out the top management making sure they never work in that capacity anymore, enforce layers of separation between businesses and let them free. Restore the Glass–Steagall Act and separate commercial banking from investment banking.

That fits with my idea that the standard politician idea of going after bankers' salaries and bonuses is moronic. The crux of the problem is how fat the BANKS get, not how they pay bigwigs.

One more comment: all governments seem bent on getting aid money back from the banking system ASAP, and the Herds are mooing that that's a good thing; but if you consider that the regulations of the banking system is more or less what it was when Lehman went under, central bankers included, I see it more as a "blank check " for keeping regulation lax ( or stupid, witness Basel II ); It would be very difficult for governments to press for reenacting the Glass- Steagall act, which would permanently erase excess profits at realities like Goldman Sachs, all the while asking the same companies to make those excess profits in order to repay the Government.

Moral hazard ...

[Pinky's Brain]

IMO FDIC is an abomination ... government bonds should be the investment of choice for people who want to have guaranteed savings (and private citizens should be first in line during issuance). Banking and other types of investment should be for people who want to bear the risks. Implicit or explicit insurance for financial instruments causes moral hazard.

Privacy is necessary for modern capitalism

[copponex]

Adam Smith talked about markets with reverence because an open market is a truly free market. When the consumers are able to see the effect of their purchases, they make much better decisions.

The problem with markets today is that they value opaqueness and secrecy above anything else. If a financial institution dared to let any of their investors see the mish mash of VBA slugged excel spreadsheets that are running their lives, they would probably lose half of their customer base overnight. If McDonalds, or any major restaurant for that matter, had to provide origin information for the products it sold, and those slaughterhouses in turn had to show the conditions that their animals live in, or the salary they paid for vegetable picking, or the environmental damage of the pesticides that overwhelm local ecosystems, they would also see a drop in businesses.

The vast majority of modern capitalism is finding some entity to exploit or enslave for a profit, and then covering that up with lies and marketing.

Re:Privacy is necessary for modern capitalism

[FiloEleven]

That's a very interesting observation. I think it's worth mentioning that "consumers" rarely fought for openness; we just want some end product and we want it cheap and immediately. Perhaps if we'd been less intellectually lazy it never would have gotten to this point.

Grandstander Eliot Spitzer thinks its a good idea

[Attila Dimedici]

Ordinarily, I would think this might be a good idea. However, Eliot Spitzer is among those calling for it. In the past there were several times where he called for "public accountability" of various corporations. Those seemed like good ideas too. They turned out to just be shakedowns and/or publicity opportunities to advance his political career, not attempts to serve the public interest. If an organization has Eliot Spitzer as a member, I will not believe that they are seeking something in the public interest. This is about serving the personal interests of the people calling for it, not about serving the public interest.

Audit the --- FED --- FIRST!!

[gd23ka]

And here's the way it'll happen:

Support Ron Paul's bill http://www.auditthefed.com/ and http://www.campaignforliberty.com/

Why audit smalltime thieves when we could be coming after the GREATEST financial criminals this far into human history!!!

They stole trillions from us and wont tell us what they did with the money.

Re:Yes, it's Bad Analogy

[Anonymous Coward]

There's a difference between having 80% ownership of a corporation and owning indebtedness of 80% of a loan for the agreed value of a property. The bank can only ask you to satisfy the debt owed, not vote upon your decisions dealing with the property nor claim ownership before foreclosure.

Paulson+Geitner+Berspankme=Criminal

[Lawrence_Bird]

There are two time frames which require serious investigation. The first is the period Sept 10-Sept 17. What was said in these meetings? Who was there? It is not even entirely clear that AIG would have failed so spectacularly had they been allowed (as proposed by NYS) to tap into some of the excess liquidity of the subs. AIG, similar to Lehmans, was all about liquidity and the lack of access to short term lending facilities. The marks that the CDS portfolio was set to take that quarter were survivable. The cash crunch came from the securities lending side as well as some debatable collateral calls by the likes of Goldmans. The government then decided to effectively do eniment domain on AIG - taking it from its shareholders (80%, they would have done 100% if law permitted) and making it a conduit to funnel money into other institutions. There was never any serious consideration given to assisting AIG, either through relaxed regulation or temporary bridge financing (public or some mixture private/public) at rates similar to those given other institutions which were far, far less punative..

Second, the time period when Treasury decided to force AIG to pay par on the CDS held by many of the counterparts, even though they were not entitled to par as most, if not all, the underlying CDOs had not yet entered default. Even so, CDS held by other institutions *never* paid at par, even when underlying bonds/structures had legitimately defaulted. It was not uncommon to only receive 65 or 70c on the dollar. Yet AIG was forced to make whole a slew of counterparts who at the least should have taken a sizable haircut if not been made to go to court to enforce their agreements if AIG had violated any of the terms.

Instead, not only did the government via Paulson/Geitner/Bernanke pay off the likes of Goldmans and Deutche, they hosed the US tax payer as well as the shareholders of AIG. Some may object to the last but consider that all the above events, particularly those in early September, amounted to the pilfering of the AIG shareholders too. Yes, they may ultimately have lost everything but the way things went down was a sham.

Re:Will this be like the CRU emails?

[ObsessiveMathsFreak]

Let me guess, I suppose none of you find it strange or noteworthy (or obvious like a sore thumb) that public (government-run) schools generally do not teach the well-known fact that under the Federal Reserve system, dollars represent debt and not wealth. They don't teach that if all debt were paid off there would be no money in circulation. They don't make it clear that when money is created out of thin air and has interest attached to it the moment it is created, there is not enough money in circulation to pay off all debt.

Another Zeitgeist victim. Here's a tip; read a book on basic finance. Better yet, just read a book. Any book. The Great Crash. Animal Farm. I don't care. Stop getting your information from YouTube and the odd polemical internet site.

Every single one of the arguments applied to "fiat money" can be just as easily applied to supposed "hard currencies" like gold. Remember, when gold or platinum or what have you is mined out of the ground, from a currency standpoint, that's exactly equivalent to some new dollar bills being printed. Dollars, euros and yen are worth money because they are (relatively) rare. It has sweet FA to do with debt. The circulation money has nothing to do with debt levels. Debt is not "created" by printing bills or mining metals. Debt is created when people spend more than they earn; which is what western society has been doing economically for 20 or more years. We'd be in debt if we used fiat money, the bren-whatever gold muck-about, or else just traded in bottlecaps.

Strong individuals can do their own research, process their own information, and obtain their own understanding. Helpless sheep need someone to both provide and interpret information for them.

And brainless fools require someone to pre-digest their information into a pseudo-intellectual web-video so it can be masticated into their waiting mouths. Learn to chew.

What we really need...

[FiloEleven]

What we really need is a giant freaking RESET button. Everybody's debt and credit is now at 0. You have what you have, start over. And be smarter this time.