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Main Street roasting on an open fire...


If you're looking for a white-hot burst of year-end nostalgia, Brady Dennis's article based on thousands of internal AIG e-mails will make you hate Wall Street all over again. Marvel, for instance, as Tom Athan, an executive in the trouble Financial Products division, gets peppered with questions by an increasingly nervous Goldman Sachs, and tells one of his bosses, "They are not budging and are acting irrational." Gasp as he continues, "This isn't what I signed up [for]. Where are the big trades, high fives and celebratory closing dinners you promised?" Weren't the Aughts awesome!?

But as Dennis points out, these e-mails aren't simply of interest to historians. They're of interest to lawyers. "While the e-mails offer the most revealing look yet at AIG's inner struggles," Dennis writes," they also underscore the main obstacle to federal prosecutors assessing individual culpability for the financial crisis. In a Wall Street culture defined by salesmanship and secrecy, divining the difference between optimism and deceit can be a legal morass."

Optimism is a nice word for it. A better one is stupidity. In other areas of the law, stupidity that hurts people gets you in trouble. Think of someone who's reckless with a gun or a car, for instance. But we've not really prepared for stupidity with a business that just happens to have its foot on the throat of the global economy. And reading this primer for prosecutors, it looks like we might want to build those laws out in the future. After all, I take on enhanced legal risks each time I step behind the wheel of my Ford Focus, in large part because I could hurt a couple of people. Why shouldn't the same be true for someone who makes obscene amounts of money manipulating global cash flows for Goldman Sachs, given that they can hurt many, many more people?

Photo credit: AIG's Manhattan headquarters, by Daniel Acker/Bloomberg News.

By Ezra Klein  |  December 30, 2009; 8:53 AM ET
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Can't we just blame Obama for everything? That's a lot easier than actually doing anything.

Posted by: roblimo | December 30, 2009 9:33 AM | Report abuse

Wouldn't it have been better to drop the implicit guarantees on loans from the government? The government has the power to limit our exposure to these risks by not backing these companies and loans, not bailing out failures, and not letting banks get so big by limiting their participation in the Fed reserve system.

A complicated set of rules isn't going to help as much as getting taxpayers and politicians out of business is.

Posted by: staticvars | December 30, 2009 9:35 AM | Report abuse

i'll look forward to looking at these, but in general, i find it hard to believe that AIG was not, at least at the executive level, engaged in a conspiracy to commit fraudulent conveyance.

Posted by: howard16 | December 30, 2009 10:24 AM | Report abuse

This is really a brilliant idea, and if law professors weren't a leisure class, they'd probably be talking about this a lot more. To be sure, the idea raises a billion questions: criminal or civil? Who is the defendant, the company or the individual employees who made the bad decisions? Strict liability or negligence or intent or what? Anyway, very cool stuff.

Posted by: blah1 | December 30, 2009 8:43 PM | Report abuse

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