Go Read It: AIG, TARP, and "The Big Takeover," in Rolling Stone

So AIG had "no idea" being leveraged 30:1 was beyond risky. The assumption was that housing prices would rise forever. Assume all those home loans that formed the basis for CDOs and SIVs and other derivatives were all soundly documented and from buyers who'd been qualified properly. Assume there was no predatory lending. Assume all business was conducted above-board.

Two narratives for the American public to choose from: stupid, or criminal?

I'm over stupid. Stupid =AIG, we were victims of bad economic luck. I've moved on to criminal. Criminal=AIG, we had all the data, mathematical models, auditable books to tell us this would blow up, and we kept all those bits that created bad economic luck for everyone else hidden as long as we could.

Criminal, as in, who at AIG knew better, and when?

Liddy made AIG sound like an orphan begging in a soup line, hungry and sick from being left out in someone else's financial weather. He conveniently forgot to mention that AIG had spent more than a decade systematically scheming to evade U.S. and international regulators, or that one of the causes of its "pneumonia" was making colossal, world-sinking $500 billion bets with money it didn't have, in a toxic and completely unregulated derivatives market [emphasis mine].

"The Big Takeover," by Matt Taibibi, Rolling Stone magazine.

Criminal, as in, instead of BAILING your ass, AIG, we should be JAILING your ass.

Where are the indictments? The subpoenas? I'd like to see what the Attorneys General of NY, CT, and DE produce. The DOJ. The UK's Serious Fraud Office.

And then, I want to see some claw-back, BIG TIME.

Cynematic blogs at P i l l o w b o o k. She keeps her pitchfork near.

Comments

[Amber/ @jerseymomma]

Yeah, I also find it very hard to belive that they thought the housing boom would go on forever-- considering every single day during the boom the talking heads ran analytical segments entitled "When will the boom burst?" and "How long will this last" and everyone predited an end at some point.

Do they really think we are all THAT dumb? I guess so.

[ron]

Actually some of these folks were selling the whole thing short, betting on the collapse. The way I see it they were playing a game of heads we win tails you lose with everyone elses money.