AIG and the Rest of the Looters

There's a cartoon in my mind. (That's the best place for it; I can't draw. I never could.)

In this cartoon in my mind, these guys are running out of a bank -- ski masks over their faces, huge bags of money slung over their shoulders -- only to find a swarm of policemen waiting for them on the sidewalk with guns drawn.

They're completely surrounded. The jig is up. And one of the robbers looks at the cops and he says, "What if we give back half of it?"

Nice try.

* * *

Welcome to AIG-Land, where no bad deed goes unrewarded -- and the worse the deed, the bigger the reward. If the high fliers of high finance haven't made enough millions on the front end, crafting their too-good-to-be-true, too-complicated-to-understand schemes, there's always the back end, where more millions await the miscreants who are willing to hang around the scene of the crime a while longer and untangle a few of the knots.

Make a mess -- get paid huge bucks for it.

Clean up the mess -- get paid huge bucks for it.

Quite a system they've got there. Where do the rest of us sign up?

* * *

A Thought for the Day: Any financial instrument that is so complex that it can only be understood by those who concocted it is, by definition, out of control.

* * *

Is there anything in all the world quite as bracing as an eruption of congressional rage? You can see the steam spewing from congressional ears, the sound bites tripping from congressional tongues. It's inspiring, really -- all that passion unleashed on behalf of the American taxpayers, who, truth be told, are not in a particularly pleasant mood themselves at the moment.

There's a connection there. The congressmen and congresswomen find themselves with only two choices in the current circumstance. They can demonstrate that they are every bit as angry as the American taxpayers are. Or they can become the target of that anger.

Since they'd like to hang on to their jobs for a while yet, it's not an especially difficult choice.

Cue the bluster.

* * *

There's a fantasy in my mind: What if the bonuses worked the other way?

What if, instead of the high fliers and the rule benders raking in all the cash, some of it went to the ones who figured out how to stop them?

Right now, the high-finance boys get the big salaries, and the even-bigger bonuses. The regulators, by comparison, get paid a pittance. The result? The top firms get their pick of the top talent -- the sharpest minds, the most creative number masseuses -- while the agencies that are supposed to keep tabs on them struggle to keep up. Even the best of the regulators often get lured away within a few years; they have families to support, after all, and house payments to make.

But what if it worked the other way?

What if the regulators were better rewarded for their efforts? Much better rewarded? What if they could keep some hefty percentage of the proceeds of every scam they uncovered, every scheme they shut down? Suddenly, the "upside potential" starts looking pretty sweet. (Impressed by the way I can sling the lingo?) Suddenly, the agencies are the place to be for the math wiz with a bit of the bounty hunter in him.

Suddenly, we've got ourselves a fair fight.

Next thing you know, they'll start paying teachers top dollar, too, and nurses, and social workers. Entice more of that top talent out of finance altogether, and into fields that could really use it.

I can't draw, but I can dream.

# # #

Rick Horowitz is a syndicated columnist. You can write to him at [e-mail].

Comments

[dadw5boys]

90 % of all those who did the iIlegal deals have already quit and left the company with Millions !!!

[scapegoat4rent]

Yes! Yes! Yes!

It is like having bounty hunters, they get to keep a certain percentage.

[IsaacKuo]

There's a reason why we have police forces, rather than just relying on bounty hunters.

Just because something can be done for a profit doesn't mean that it can be done BETTER for a profit.

[IsaacKuo]

If you give financial incentives to the cops, then they have the incentive to "look the other way" until the little fish become big fish. The cops become something like "crime farmers", helping crime grow and only culling away ripe fat cats.

You end up fostering more crime and corruption rather than less crime and corruption.

Consider the relationship between a farmer and his herd...is his incentive to shrink the herd or grow it?

[scapegoat4rent]

What are you talking about, worried that it will work?

So do you work for? One of the tarp babies?

Using your scenario, I rather that a few fat cats gets caught than no fat cats being caught. LOL at your arguement.

[IsaacKuo]

No, I don't work in the financial sector, but that's irrelevant. I have no love for the industry I do work in (I'd love to see it completely taken over by the government).

The cops do their best work when they don't have a financial conflict of interest. You think that the cops won't catch anyone if they're paid normally rather than on commission? Ridiculous.

[Joethepauper]

The money in the economy didn't just disappear into a black hole. That money still exists, it's just not in circulation anymore. It sits in the bank accounts of the wealth holders who benefitted from Bush's tax cuts. It only took 8 years of making MASSIVE profits and paying no taxes on those profits to drain the economy dry. It will never "trickle down". It will sit in those wealthy people's bank accounts until their children's children's children eventually spend it. But they will always make more money than could possibly be spent, so they will continue being wealthy forever. But since we live in a capitalist system, those wealthy people's children have a huge advantage over the rest of us. To participate in capitalism, you have to have capital. By taking all that money away from us and giving it to the wealthiest people on Earth, we just ensured that the wealthy families will continue to control the system for generations to come. All that wealth they have accumulated for the past 8 years will influence elections, pay off lobbyists to bribe Congress, and basically keep them obscenely wealthy FOREVER.

[MannFarm]

Correct.

[BillWilliam]

When are we going to realize that the economic downfall was not an accident? This was deliberate criminal or military action against out country. I have asked why would a mortgage lender make loans to someone who can not pay the loan back? To make money? How? By selling those loans to investors who have a hedge or insurance in case the mortgage is not paid. In the case of insurance companies law requires that the item being insured is not worth less than the amount of the policy. Only one claim can be made per loss. The cost of the insurance is about equal to the risk. In 1999 a law was passed allowing a type of contract called a Credit Default Swap. As the law was passed it was stipulated in the law that there could be no rules or regulations limiting these contracts. This allowed issuers of these contracts to hedge or insure anything and have as many claims against a single loss as they could sell contracts for. Why would they do that? To make money? The only ones who profited from this scheme were those who bought the CDS contracts. They are the enemy! We as a nation need to declare the CDS scheme as an act of war and recover the funds from those who had the largest contracts. We do not even know who attacked us. When I look at who the largest CDS owners are I was surprised.

[Hopefulinfl]

Care to post a link or more information?