The Real AIG Outrage

Editorial - March 17th, 2009 - Wall Street Journal (Opinion Journal)

Given that the government has never defined "systemic risk," we're also starting to wonder exactly which system American taxpayers are paying to protect. It's not capitalism, in which risk-takers suffer the consequences of bad decisions. And in some cases it's not even American. The U.S. government is now in the business of distributing foreign aid to offshore financiers, laundered through a once-great American company.

The politicians also prefer to talk about AIG's latest bonus payments because they deflect attention from Washington's failure to supervise AIG. The Beltway crowd has been selling the story that AIG failed because it operated in a shadowy unregulated world and cleverly exploited gaps among Washington overseers. Said President Obama yesterday, "This is a corporation that finds itself in financial distress due to recklessness and greed." That's true, but Washington doesn't want you to know that various arms of government approved, enabled and encouraged AIG's disastrous bet on the U.S. housing market.

George W. Bush will go down in history as the fiscally irresponsible buffoon who started this crony capitalism bailout. But Barack Obama will not avoid his own culpability by saying, "Don't blame me - Bush did it first, whine whine ..."

I am convinced though that Iowa Sen. Charles Grassley has gone further than anyone. Nigel Duara reported he "suggested that AIG executives should take a Japanese approach toward accepting responsibility for the collapse of the insurance giant by resigning or killing themselves ..."

"I suggest, you know, obviously, maybe they ought to be removed," Grassley said. "But I would suggest the first thing that would make me feel a little bit better toward them if they'd follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide.

"And in the case of the Japanese, they usually commit suicide before they make any apology."

Wow. Can anyone remember an American Senator demanding that private citizens who have committed no crime commit suicide because they did something unpopular with politicians? People inside AIG who know say that the people who created the problem have long since fled. The people left are trying to clean up the mess. One claim is that this group have reduced the AIG obligations by more than a trillion dollars as a result their work. If true, why would anyone dispute giving them a thousandth of that for their work? Isn't that a whole lot better than taxpayers paying that trillion dollars? What is needed is less demogoguery and more knowledge by both politicians and the mob in the street.

The issue that still keeps being ignored is the criticism that George Soros started the collapse to get Barack Obama elected. There is evidence of that but so far no one is being permitted to investigate. Even George Bush and his co-conspirators Henry Paulson and Ben Bernanke seem unwilling to find out if that is true. I wonder why?