Matt Taibbi sums up the bailout of Wall Street.
It has been four long winters since the federal government, in the hulking, shaven-skulled, Alien Nation-esque form of then-Treasury Secretary Hank Paulson, committed $700 billion in taxpayer money to rescue Wall Street from its own chicanery and greed. To listen to the bankers and their allies in Washington tell it, you’d think the bailout was the best thing to hit the American economy since the invention of the assembly line. Not only did it prevent another Great Depression, we’ve been told, but the money has all been paid back, and the government even made a profit. No harm, no foul – right?
Wrong.
It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it. The result is one of those deals where one wrong decision early on blossoms into a lush nightmare of unintended consequences. We thought we were just letting a friend crash at the house for a few days; we ended up with a family of hillbillies who moved in forever, sleeping nine to a bed and building a meth lab on the front lawn.
And now AIG, one of the companies we helped get through rehab — and is now running a PR campaign to say “Thank you” — is thinking about suing the U.S. government because their stockholders didn’t get a pony.
Digby says that’s chutzpah. Wrong; it’s typical.
It’s been pointed out to me that the AIG lawsuit debate is defensible.
1) The AIG board would be guilty of failing their responsibilities if they did not review the case and make some public decision. The lawsuit is already filed: the directors have to make some kind of decision about it, and have to be seen to do so publicly, just to keep their positions. They’re most likely to review the case, decline to join since it’s a bad suit with no merits, and poor corporate policy to participate, and (hopefully) quash the suit by doing so.
2) The suit is a class-action by shareholders, not AIG itself. On the one hand, many of the largest shareholders are likely to be investment funds and pension plans: they are obligated to seek maximum returns for their participants, and to use whatever appropriate and legal means to do so. Any investor would be incensed if their fund/pension manager did not work for maximum returns: for the individual retiree, in the absence of a meaningful retirement system, those returns are the only thing between them and living in a box and dining on cat food. For the rest, though, this is Bush Tax Cuts 2.0: if there’s a Teahad aspect to this, it’s that the US federal government made a profit on the AIG bailout – and the Gubmint ain’t NEVAH s’posed ter make money.