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Call To "Open Source" AIG Investigation

Soulskill posted more than 4 years ago | from the still-looking-for-somebody-to-crucify dept.

The Almighty Buck 259

VValdo writes "As you may recall, the citizens of the US shelled out about $85 billion to bail out AIG and its creditors (Goldman Sachs in particular) last year. But as 80% owners of AIG, we still don't know what happened, exactly. That may change. In a new op-ed piece, former prosecutors (including former NY governor Eliot Spitzer) are calling for the US Treasury to force AIG to release its treasure-trove of emails to the public before allowing AIG to 'break free' of our control. As the prosecutors put it, 'By putting the evidence online, the government could establish a new form of "open source" investigation. Once the documents are available for everyone to inspect, a thousand journalistic flowers can bloom, as reporters, victims and angry citizens have a chance to piece together the story.' Good idea?"

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Rigghttt... (2, Insightful)

Anonymous Coward | more than 4 years ago | (#30503812)

That's a good one. Goldman Sachs and Lehman Bros ARE the government.

Re:Rigghttt... (3, Funny)

iluvcapra (782887) | more than 4 years ago | (#30504508)

Lehman no longer exists, so I guess that makes us a one-party state? :p

Yes. (5, Insightful)

selven (1556643) | more than 4 years ago | (#30503824)

We own 80% of AIG, so 80% of AIG is technically part of the federal government. That means we should have open access to everything just like we should have open access to the Congress, senate, court system, etc.

Re:Yes. (1)

timeOday (582209) | more than 4 years ago | (#30503972)

The couter-argument is that opening the bank would make it less competitive, and so less likely to repay its debt to us. Is it true? I don't know.

Re:Yes. (4, Insightful)

MikeURL (890801) | more than 4 years ago | (#30504208)

If Americans accept this argument then they can expect the government to simply keep the spigots open and funnel every last dollar in the economy to wealthy people. Those wealthy people will then give the people elected ever more money so they can stay in power.

At some point there is a level of apathy that will almost force people in power to behave badly. If you kick someone in the balls and they smile and give you a $100 bill then eventually you will not only do a LOT of kicking but you also come to hate that stupid smiling face.

Not quite (3, Informative)

SlappyBastard (961143) | more than 4 years ago | (#30503982)

Being 80% owned does not integrate a corporation into the entity that owns it. Trust me, Verizon has been using the exact theory for decades to lock Verizon Wireless workers out of the main Verizon company's collective bargaining agreement. Also, ask the Rigases (who owned Adelphia) if full ownership entitles you to complete run of the company -- it can be a jailable offense if you go about owning the company you own to aggressively.

A stockholder company has a wide range of fiduciary issues. It's very likely that if the government, as 80% owner, tried to force corporate secrets into the open that the other 20% could sue them for abandoning their responsibility to the company.

Re:Yes. (2, Interesting)

HeLLFiRe1151 (743468) | more than 4 years ago | (#30504194)

My mortgage company owns 80% of my house but I don't want them coming in whenever they feel like it. Yes, shareholders should know some things such as pay, retirements, investments and investigations. If you opened up everything and every secret you are just giving an advantage to your competitors, who don't have to disclose certain details of their business.

Be careful what you wish for.... (-1, Offtopic)

Anonymous Coward | more than 4 years ago | (#30504546)

.
      * May you live in interesting times

      * May you come to the attention of those in authority

      * May you find what you are looking for

Re:Yes. (1)

furball (2853) | more than 4 years ago | (#30504632)

The question then is whether the information we're looking part of the 80% or is it part of the 20%? What if they just average it out and only give us 80% of every meg of data as an example?

Keep Dreaming (4, Informative)

arcticinfantry (1130171) | more than 4 years ago | (#30503828)

This will *never* happen. GS is far too powerful to let that happen. The AIG bailout was quite simply a giveaway to GS.

Re:Keep Dreaming (1)

maxume (22995) | more than 4 years ago | (#30504062)

Maybe, but there was no regulatory mechanism in place to resolve the situation where AIG would be in default on contracts that they were not legally allowed to default on (insurance).

Giving a few banks $80 billion was a lot cheaper than having the government stand behind every AIG insurance policy (The government is doing that, but the current legal fiction is better than the one where they put the U.S. government on the contracts).

Re:Keep Dreaming (2, Interesting)

arcticinfantry (1130171) | more than 4 years ago | (#30504152)

Yeah, but there could have been some bargaining on the govt's part regarding a percentage of remuneration. I think one of the AIG creditors (foolishly) mentioned they'd accept something like 95 cents on the dollar. All debts were paid in full. It's easy to do that if you've got a blank check in your hip pocket from the govt. BTW, CDS's are *not* insurance. FWICT, they're just a device to allow CEO's to fool themselves and stockholders into thinking the company has no liabilities.

Re:Keep Dreaming (1)

maxume (22995) | more than 4 years ago | (#30504188)

I'm not talking about AIG defaulting on CDSs, I'm talking about there not being enough money under the corporate umbrella to resolve the CDSs and still honor their insurance and reinsurance contracts.

Re:Keep Dreaming (1)

arcticinfantry (1130171) | more than 4 years ago | (#30504400)

OK, I'm talking about the point at which AIG was insolvent and the government stepped in. Chairman Bernanke said the were no "resolution procedures in place for systematically important non-bank firms". Couldn't Paulson/Bernanke have played a little hardball on behalf of the taxpayers and given a "haircut" by talking directly to CDS creditors? fed link [federalreserve.gov]

Re:Keep Dreaming (3, Insightful)

maxume (22995) | more than 4 years ago | (#30504450)

It's likely that they could have pushed the haircut issue, but the banks that got the money were not the ones that would lose on the insurance contracts (for instance, Goldman only stood to lose $14 billion if AIG completely exploded, AIG's customers stood to lose hundreds of billions, so the government would have been depending on the generosity of the creditors (if they were willing negotiators), or doing even more damage to contract law (if they were unwilling)).

Re:Keep Dreaming (1)

arcticinfantry (1130171) | more than 4 years ago | (#30504606)

Well, Forgive me, because I don't know much about finance and the Fed, but Bernanke had other options other than the one taken didn't he? It seems he could have threatened doing a whole host of things including nationalizing AIG. He had bargaining power. It looks *very* bad to an outsider like me. Especially considering how bankruptcy works.

Re:Keep Dreaming (1)

Pinky's Brain (1158667) | more than 4 years ago | (#30504200)

Bankruptcy is a regulatory mechanism in place to resolve situations where companies don't have the financial means to abide by their contracts.

Re:Keep Dreaming (4, Interesting)

maxume (22995) | more than 4 years ago | (#30504228)

Insurance businesses are regulated in such a way that they are not supposed to go bankrupt, AIG managed to avoid those regulations and become bankrupt (but the government chose to dump money in rather than attempting to resolve it through the traditional process).

Re:Keep Dreaming (0)

Anonymous Coward | more than 4 years ago | (#30504180)

This is exactly right.

And it's not just Goldman. The whole financial industry counts on a certain amount of privacy (secrecy, really). The entire financial sector, and all of the regulators who move back and forth between jobs in the private sector and the government would never allow this to happen. They wouldn't even see it as putting in the fix or being corrupt -- it would seem totally unthinkable and nonsensical to them.

Money rules the world. The people in America bow down to those guys just like everyone else does. We have it a lot better than most -- at least they don't fight wars here to loot our resources.

No (5, Interesting)

cheesybagel (670288) | more than 4 years ago | (#30503830)

No, not a good idea. What is the point in having a Cultural Revolution? Better to just split these companies which are too big to fail into smaller chunks, kick out the top management making sure they never work in that capacity anymore, enforce layers of separation between businesses and let them free. Restore the Glass–Steagall Act and separate commercial banking from investment banking.

Re:No (5, Insightful)

Anonymous Coward | more than 4 years ago | (#30503866)

We need that and a 'Cultural Revolution' that fights back against the idea that the upper class knows what's best for the rest of us and that any attempt to eek out even 4% more of their wealth from them is not socialism at all.

Re:No (4, Interesting)

trout007 (975317) | more than 4 years ago | (#30503976)

You have it completely backwards. I'm a libertarian but the one place the socialists have it right is that "some" of the rich steal it from the "workers". The problem as I see it with the socialists is that they don't distinguish how people get rich. There are people that get rich by making things that people value ie, computers, software, entertainment, machines, goods, services. Then there are those that actually steal it which are the bankers, lawyers, and investment houses. The bankers steal it because they have had laws written that allow them to create money out of thin air and lend it with interest. What happens when money is created out of nothing is a little bit is stolen from everyone holding that currency by inflation. So they can become famously rich without doing anything of value. And of course they gamble that money they created at 30 to 1 leverage which makes them even richer. And when the whole gamble fails to pay off they just run to their lawyer friends in DC and get bailed out claiming that if they go down so will the country. Well I call BS. If they were allowed to fail we would have a serious deflation with all of their fake money getting destroyed. As long as minimum wage laws were repealed all prices would drop and those that were thrifty and saved money would do much better because those dollars would be worth more. But of course we can't have that so the Federal Reserve creates even more money (stealing it through inflation) to give to their buddies.

Re:No (0, Troll)

dlt074 (548126) | more than 4 years ago | (#30504056)

and by the upper class that knows best, you should be referring to the elite politicians that bailed out the private industry. private industry and free markets should never be bailed out by the government. refocus your indignation and hatred for those you have erroneously placed above yourself to those that are causing the problems to begin with.

when you take my money without my permission and justify it as the greater good, that IS socialism. and socialism is not Constitutional. either change the Constitution by the rules or stop stealing my money to make yourself feel better.

Re:No (1)

maxume (22995) | more than 4 years ago | (#30504094)

The great majority of the wealth of the United States (production) is consumed by 'poor' people. There are a few hundred trillion dollars of standing wealth in the world (that's including things like houses, which are actually owned and used along a rather egalitarian distribution), several times that has been consumed in the U.S. alone over the last 40 years.

Re:No (2, Insightful)

arcticinfantry (1130171) | more than 4 years ago | (#30503888)

Yeah, nice idea, but you'd need a legion of Paul Bunyan's to do that. Obama would probably chop his foot off on the first swing.

Re:No (1)

192939495969798999 (58312) | more than 4 years ago | (#30503930)

The point is that we won't get congress or etc. to split them up without having people really get mad and the only way to get people mad enough to care may be this email thing.

Re:No (1)

timeOday (582209) | more than 4 years ago | (#30503934)

Better to just split these companies which are too big to fail into smaller chunks

That wouldn't work, the banks are all interconnected through loans and insurance policies, if some start to fail they all fail.

Re:No (2, Informative)

Rich0 (548339) | more than 4 years ago | (#30504096)

Well, the dicing up will limit the power of individual banks.

However, you are correct that the problem was that EVERYBODY was acting stupid. The problem is that when all your competitors are making risky loans and selling them to investors as safe loans you have two choices:

1. Do the same thing.
2. Watch all the investors pull out all of their money and give it to those who do #1.

After all, if you're an investor, which fund would you invest in? The AAA bond fund yielding 15%, or the AAA bond fund yielding 5%?

A big problem is that individual investors are far too insulated from the investment decisions. Most people have a choice of maybe 20 mutual funds in their 401k - usually from one or two investment houses. At best they get a quarterly statement and some audits. Nobody really works for the individual investor in such a setup - the funds make their pitches to their employers. People are told to just set aside 10% of their income and watch it grow, and that investments are too complicated for them to deal with. Nobody is accountable when things go wrong.

The free market only works when consumers can make educated choices. That is why there was a ton of regulation after the 1929 crash.

Re:No (1)

shentino (1139071) | more than 4 years ago | (#30504140)

I think the insurance industry needs the same sort of backing that the FDIC gives our banking system.

At a minimum I think it would be prudent to require an insurance company to carry a government backed surety bond to ensure that clients get paid their settlements even if the company goes tits up.

I say government backed because asking the insurance industry to insure itself is a circular nightmare.

Re:No (1)

causality (777677) | more than 4 years ago | (#30504284)

I think the insurance industry needs the same sort of backing that the FDIC gives our banking system.

At a minimum I think it would be prudent to require an insurance company to carry a government backed surety bond to ensure that clients get paid their settlements even if the company goes tits up.

I say government backed because asking the insurance industry to insure itself is a circular nightmare.

The only difference between the bailouts and an FDIC-like system is that the FDIC-like system is negotiated and its terms are spelled out before something goes wrong. Otherwise they are the same.

Moral hazard ... (2, Insightful)

Pinky's Brain (1158667) | more than 4 years ago | (#30504386)

IMO FDIC is an abomination ... government bonds should be the investment of choice for people who want to have guaranteed savings (and private citizens should be first in line during issuance). Banking and other types of investment should be for people who want to bear the risks. Implicit or explicit insurance for financial instruments causes moral hazard.

Re:No (2, Interesting)

arcticinfantry (1130171) | more than 4 years ago | (#30504442)

I'm with you. I think having banks that are nation-wide is very risky. Having that much cash in one place invites all sorts of corruption (the ultimate example being the federal government). My current bank is getting rather large through mergers and expansions and it has me worried. I'd support breaking banks into regional/state entities.

Re:No (1)

zippthorne (748122) | more than 4 years ago | (#30504610)

Indeed. 401ks and other retirement funds are kind of a scam in themselves. The liquidity you sacrifice by having your wealth tied up might very well not be offset by the (uncertain due to the shifting nature of politicians sticking their thumbs on in the tax pot all the time) tax savings.

Re:No (1, Insightful)

Cyner (267154) | more than 4 years ago | (#30503954)

I agree, the public is just going to crucify the company. We need to move forward, fix the problems, and make sure they don't happen again.

On the other hand, this might be a great learning exercise for academia. It might be nice if accredited institutions could review a portion of the details in the interests of study cases; particularly a business ethics class (no that's not an oxymoron).

Re:No (5, Interesting)

causality (777677) | more than 4 years ago | (#30504316)

I agree, the public is just going to crucify the company. We need to move forward, fix the problems, and make sure they don't happen again.

On the other hand, this might be a great learning exercise for academia. It might be nice if accredited institutions could review a portion of the details in the interests of study cases; particularly a business ethics class (no that's not an oxymoron).

Business ethics: if it's legal, do it for short-term profit with no regard for side-effects, long-term losses, or harm that it might cause to other people. If it's not legal, grease the right palms until it becomes legal.

Re:No (1)

tomhath (637240) | more than 4 years ago | (#30504044)

Restore the Glass–Steagall Act and separate commercial banking from investment banking.

Yes, several harmful changes to banking laws made during the nineties need to be rolled back, including the the Gramm-Leach-Bliley Act [wikipedia.org] as it was pushed through by Sens. Dodd and Schumer. Also the amendments passed in 1992 [wikipedia.org] which mandated banks make high risk loans they wouldn't have made otherwise.

Re:No (1)

Jeremy Erwin (2054) | more than 4 years ago | (#30504452)

If you want high rates of return, you've got to make high risk loans-- and hide the risk.

Re:No (1)

Pinky's Brain (1158667) | more than 4 years ago | (#30504488)

Well those probably should be repealed ... but to say the banks wouldn't have made those loans otherwise is silly. There was literally no risk in making those loans. Hundreds of subprime lenders were set up in fact just to make those kind of loans without any need for government pressure. The risk was in buying MBS's build on those loans ... but no law mandated anyone to do that, and yet so many did because of misplaced trust in Moody's/etc. The problem is that the market can't recognize (systemic) risk.

only too true (2, Insightful)

gadget junkie (618542) | more than 4 years ago | (#30504236)

No, not a good idea. What is the point in having a Cultural Revolution? Better to just split these companies which are too big to fail into smaller chunks, kick out the top management making sure they never work in that capacity anymore, enforce layers of separation between businesses and let them free. Restore the Glass–Steagall Act and separate commercial banking from investment banking.

That fits with my idea that the standard politician idea of going after bankers' salaries and bonuses [ft.com] is moronic. The crux of the problem is how fat the BANKS get, not how they pay bigwigs.

One more comment: all governments seem bent on getting aid money back from the banking system ASAP, and the Herds are mooing that that's a good thing; but if you consider that the regulations of the banking system is more or less what it was when Lehman went under, central bankers included, I see it more as a "blank check " for keeping regulation lax ( or stupid, witness Basel II [bis.org] ); It would be very difficult for governments to press for reenacting the Glass- Steagall act, which would permanently erase excess profits at realities like Goldman Sachs, all the while asking the same companies to make those excess profits in order to repay the Government.

Re:only too true (1)

causality (777677) | more than 4 years ago | (#30504458)

That fits with my idea that the standard politician idea of going after bankers' salaries and bonuses [ft.com] is moronic. The crux of the problem is how fat the BANKS get, not how they pay bigwigs.

It's not really moronic; it's deliberate. It's actually quite clever, though in an evil sort of way. The point of that is to satisfy the visceral outrage of their constituents without having to actually address the real problem.

If the politicians did otherwise, they'd be backstabbing the people who got them into office in the first place. Their reward for that would be replacement by another politician who's more willing to play ball.

When FDR said: "In politics, nothing happens by accident. If it happened, you can bet it was planned that way," I wonder what people think he was talking about.

Wonderfull Idea (4, Insightful)

Anonymous Coward | more than 4 years ago | (#30503832)

Put PJ in charge! :)

Re:Wonderfull Idea (0)

Anonymous Coward | more than 4 years ago | (#30504110)

No. Just let 4chan and the furries take care of this. They know Computer Science III.

Superheroes (0, Troll)

BadAnalogyGuy (945258) | more than 4 years ago | (#30503840)

Most comic book superheroes are vigilantes. They work outside the law to bring evildoers to justice. When drawn like Adonii and Venii, with skin-tight spandex costumes and long flowing capes, their actions are well understood to be for the common good.

Contrast this with vigilantes in real life. When people act outside the law to bring down "evildoers" we call them terrorists [wikipedia.org] , murderers [wikipedia.org] , and Menaces to society [wikia.com] . We simply can't tolerate vigilantism in a civilized society. Justice must operate within the confines of the law, and that implies that the accused must have some level of privacy.

To open the case up to the general public means forcing any shred of privacy of every employee of AIG out into the open. It also means that anyone with an agenda can use the material to find ways to destroy those employees. It encourages vigilantism and erodes the rights of everyone for no good reason.

Re:Superheroes (4, Interesting)

countertrolling (1585477) | more than 4 years ago | (#30503884)

A corporation's, or any other authority's "right to privacy" should be much more limited than it is. And even more obviously, we shouldn't be giving it rights as a person. What an absurd concept! But since we always try to put a human face on everything, from god on down, it seems inevitable. And vigilantism becomes inevitable when the confines of the law aren't applied equally and the system breaks down.

Re:Superheroes (1)

mhelander (1307061) | more than 4 years ago | (#30504290)

So you're saying law should be executed privately lest the public go vigilante without even wearing spandex?

Hrmm (3, Insightful)

acehole (174372) | more than 4 years ago | (#30503842)

Unlike movies, the guys in high places taking home the multimillion dollar salaries 99% of the time dont get caught. They cover for each other.

Sad fact of life,

Re:Hrmm (0)

Anonymous Coward | more than 4 years ago | (#30503856)

that is the only thing I learn in Ivy School.
Cover each other the pleb is there to catch you.

Re:Hrmm (1, Funny)

Anonymous Coward | more than 4 years ago | (#30503936)

Which is why every single CEO or manager at AIG or any other "financial institution" should be dragged into the streets and shot in the head twice.

Small Print (1)

Veetox (931340) | more than 4 years ago | (#30503848)

Shouldn't this have been required when the federal government first loaned them the money? Who F'd that one up?

Re:Small Print (1)

betterunixthanunix (980855) | more than 4 years ago | (#30504190)

The same people who did not bother to state that the bailout money should not be used to pay bonuses, buy private jets, or pay for any number of other luxuries that many of these companies spent tax dollars on.

Obama (0)

Anonymous Coward | more than 4 years ago | (#30504432)

Obama... he and his team are perhaps the most pro-corporate administration I've ever seen in office.

Only part of the problem (1, Interesting)

Anonymous Coward | more than 4 years ago | (#30503854)

Bear Sterns was deliberately crashed as part of a scheme to cover up the JP Morgan and Chase insolvency.

Audit the Fed!

Will this be like the CRU emails? (0)

Anonymous Coward | more than 4 years ago | (#30503858)

Will these e-mails be treated like the CRU emails were, where partisans of AGW defended conspirators clearly conspiring to fudge data, censor critics, and basically do whatever it takes to get their side presented as the consensus?

Here's hoping the AIG e-mails don't have an internet defense team consisting of bloggers plugging their ears and saying "la-la, I can't hear you".

Re:Will this be like the CRU emails? (2, Interesting)

Anonymous Coward | more than 4 years ago | (#30504182)

Here's hoping the AIG e-mails don't have an internet defense team consisting of bloggers plugging their ears and saying "la-la, I can't hear you".

That's what they do whenever you point out that this was an engineered, deliberate economic crisis. Or that fiat currency based on fractional reserve banking is inherently unsustainable and absolutely must have an ever-growing amount of debt attached to it. I think the people who are capable of realizing the truth of these things have already done so, and an attempt to share this knowledge with anyone else just leads to dismissal without examination. No evidence is ever good enough when the person is naive, cowardly, in deep denial, or otherwise just doesn't want to believe that a few puppeteers can manipulate and micromanage both our political and economic systems despite the multitude of signs and abundance of evidence that this is so.

It's sort of like when Galileo tried to convince the Church to look through his telescope; he was right, but he was offering evidence of something that the Church just didn't want to acknowledge. So naturally the Church tried to discredit, marginalize, intimidate, dismiss, stigmatize, pretty much anything other than examine his evidence. Just like you guys do when someone points out the social and economic engineering that should be obvious and you respond by calling him a conspiracy nut.

In the old days, you had to take someone's money from them by force or fraud in order to steal from them. That model is now obsolete. Through inflation, the powerful can steal the value of your money without ever taking one cent out of your pocket or bank account. For the thieves, this has the added bonus that the average American is so stupid that they don't feel victimized when this happens, not like they would feel if a mugger pointed a gun at them and said "stick 'em up".

Let me guess, I suppose none of you find it strange or noteworthy (or obvious like a sore thumb) that public (government-run) schools generally do not teach the well-known fact that under the Federal Reserve system, dollars represent debt and not wealth. They don't teach that if all debt were paid off there would be no money in circulation. They don't make it clear that when money is created out of thin air and has interest attached to it the moment it is created, there is not enough money in circulation to pay off all debt. They especially don't explain that this puts our government into a debt cycle that is like a downward spiral. The only thing it can do is borrow money, and then borrow more money to pay off the interest on the money they borrowed, and borrow more money to pay for the interest of that, etc, until there is so much debt that foreclosures and bankruptcy and who has them become only a game of musical chairs. Isn't it "odd" that during the entire 12 years of public schooling, they never once find a few moments to mention important facts like that?

Strong individuals can do their own research, process their own information, and obtain their own understanding. Helpless sheep need someone to both provide and interpret information for them. If the only thing you know about how our society operates is what they tell you in school and in the media, then you my friend are part of the problem. Sheep demand a shepherd. Individuals demand freedom. Freedom includes an honest economic system based on representative currency; otherwise, debt becomes a slightly nicer way to enslave people than men with guns.

The Risk (4, Insightful)

Anonymous Coward | more than 4 years ago | (#30503864)

As purported owners of 80% of AIG, shouldn't taxpayers also be concerned that the information released could compromise the viability of their investment necessary to regain their lost billions?

I'd love to know what happened but I also want the money they took from me plus an onerous amount of interest. I think the interest will discourage them (and anyone who looks up to their executives as examples of how to rape taxpayers) from repeating their greed/mistakes. Of course what they really deserved was to sink like the anchors they were... Seriously, if you divide the TARP bailout money it comes out to $20,000 per US citizen. My savings and investments can't cover that level of corporate charity disguised as taxes.

Re:The Risk (0)

Anonymous Coward | more than 4 years ago | (#30504158)

Sorry, it was an interest free loan from the government. Then they turn around and hike rates up to 30% on all your credit cards. Don't expect any phone calls, they even obligated to buy us dinner before they screwed us.

Re:The Risk (0)

Anonymous Coward | more than 4 years ago | (#30504186)

TARP was $700 billion; there are about 300 million US citizens. That works out to $2,333 per person. A large sum, to be sure, but you were off by an order of magnitude. Whether or not you agree with the ideology behind TARP it isn't hard to believe that the overall cost per US citizen could have been far greater than $2,333 if the financial markets were allowed to melt down completely. I don't think anyone really wanted TARP - but it was too late to do anything else by the time the meltdown happened.

Re:The Risk (2, Insightful)

nedlohs (1335013) | more than 4 years ago | (#30504516)

Sure, if you ignore the simple fact that TARP just put a band-aid on. So in the next couple of years we'll get to pay for the real collapse as well.

$2,333 per person to delay and compound something for a few years doesn't seem so wonderful to me.

If gov funded research has to be published why not (2, Informative)

Dr_Ken (1163339) | more than 4 years ago | (#30503876)

this stuff too? Who pays the piper calls the tune. I have to sign away exclusive publishing rights to any work I do with gov funding (no matter how peripheral or limited) if I accept it. AIG should get no waiver on that score either imho.

Hell yeah it's a good idea (1)

jayhawk88 (160512) | more than 4 years ago | (#30503896)

Which is why it will never, never happen. You'll learn the truth about Roswell and JFK before you see those emails.

Privacy of customers? (1)

Bacon Bits (926911) | more than 4 years ago | (#30503900)

If they can somehow ensure that the identity of the bank's customers will not be released or revealed, then I have no problem with the books being opened.

Ummm... (5, Insightful)

Anonymous Coward | more than 4 years ago | (#30503904)

We know exactly what happened... a few *idiots* in AIG's derivatives trading department thought they could sell credit default swaps on mortgage backed securities without keeping *anything* in reserve. It's actually a great strategy... unless housing prices go down, in which case you will take huge, mind-boggling losses. Essentially a few people in one department of an otherwise well run institution took down the whole thing by drastically underestimating risk.

Credit default swaps are an insurance product. If you sell them, then you had better keep proper reserves to cover claims AND you had better buy reinsurance in case there is a market downturn. AIG did neither and went kaput.

Re:Ummm... (1)

arcticinfantry (1130171) | more than 4 years ago | (#30503964)

I think it goes a little beyond AIG. The only difference between AIG and Goldman Sachs is that GS had the muscle to make its CDS's good at our expense.

Re:Ummm... (0)

Anonymous Coward | more than 4 years ago | (#30504002)

AIG made its CDS's good at our expense too. Sure, the shareholders were thoroughly diluted, but they would have *nothing* without the bailout. Making the CDS's good was the whole point of bailing out AIG and GS.

Re:Ummm... (1)

arcticinfantry (1130171) | more than 4 years ago | (#30504100)

GS [google.com]
AIG [google.com] Really? I'd think the whole point would be preventing the tanking of the whole industry. Do you think that it would be possible for there to be a more even handed result? There's this thing called bankruptcy where creditors get a percentage of what's owed. Why is that not good enough for GS? AIG could have been protected (or not), the system could have been saved, and a certain company could have faced some real consequences. Don't see the rampant favoritism to one particular company yet?

Re:Ummm... (2, Insightful)

mbone (558574) | more than 4 years ago | (#30504130)

We know exactly what happened... a few *idiots* in AIG's derivatives trading department...

Sorry, but I don't buy it. My experience is that idiocy generally starts at the top, but it doesn't really matter. Like the Captain of a ship, the people at the top of a company should be responsible in any case, even if they didn't know.

A little late... (1, Insightful)

Anonymous Coward | more than 4 years ago | (#30503910)

Shouldn't we have seen those emails BEFORE we bailed them out?

Investigation By Mob (1)

arbiterxero (952505) | more than 4 years ago | (#30503916)

Yes, and we'll tie rocks to their feet. If they sink, they were innocent, if they float, they're guilty and we should burn them at the stake.

Yes. (0)

Anonymous Coward | more than 4 years ago | (#30503940)

Yes. Next Question.

Open Source the Whole Industry (3, Insightful)

Anonymous Coward | more than 4 years ago | (#30503942)

This is a great idea, but it is POST-crash thinking. That's how prosecutors think: They wait for something bad to happen, see blood in the water and then look for the crime. Certainly this is a part of how regulation must happen.

But, there is an even more powerful, I would say way more powerful, idea lurking behind what they are considering: Why not "open source" the whole industry? For example:

  o Have open source analytics that measure risk and values and apply those analytics against firm positions to show aggregate exposures and stress values? The recent "stress tests" that were performed against the banks were generally considering quite weak by industry standards. For example, they were based on single scenarios being applied against option-like positions. And, the scenarios were simply housing and interest rate related but not further defined by prepayment and default models. A full analytics package applied with monte carlo methods would give a much more robust answer of the true risks. Shouldn't we know exactly what exposure all large firms have? If the market has much more information on the risks that various firms are taking, it will be much easier to reward good decisions and punish bad ones.

  o Force all firms of a given size to publish their largest counter-party exposures on a daily basis. If I own BAC and they are long AIG, shouldn't I as a shareholder be able to see the exposure? Shouldn't anyone be able to see that, for the benefit of the whole? If you produce enough of the counter-party graph connectedness, the market will have much more information on system stability and be able to punish/reward bad/good decisions.

  o Shouldn't we be able to see prices of ALL transactions that occur in the capital markets? This is a pretty simple database: CUSIP, Date/Time, Amount, Price. Currently members of the public can only see corporate and (I believe) muni prices. What about MBS/ABS/CMBS/CDO/CLO etc? Also, for OTC transactions there could be other databases that show counter-parties, etc.

  o How about seller transparency in fixed income markets? If an MBS deal is coming to market, shouldn't the buyers get access to all material information the sellers have? This would allow for a market where the buyers can actually price risk without massive information asymmetry.

  o Getting back to open source analytics, having such analytics (paid for by the large financial firms and produced by independent modelers) would greatly help the fractured buy-side firms who simply can't otherwise compete with the large firms that develop sophisticated, proprietary analytics.

If you want to open source the capital markets, there are many, many things you could do that are proactive and would lead to much greater transparency and stability.

Re:Open Source the Whole Industry (3, Insightful)

arcticinfantry (1130171) | more than 4 years ago | (#30504034)

But that would ruin the whole purpose of CDS's!! Where would a CEO be able to rat hole liabilities to improve the balance sheet!

Privacy is necessary for modern capitalism (2, Interesting)

copponex (13876) | more than 4 years ago | (#30504448)

Adam Smith talked about markets with reverence because an open market is a truly free market. When the consumers are able to see the effect of their purchases, they make much better decisions.

The problem with markets today is that they value opaqueness and secrecy above anything else. If a financial institution dared to let any of their investors see the mish mash of VBA slugged excel spreadsheets that are running their lives, they would probably lose half of their customer base overnight. If McDonalds, or any major restaurant for that matter, had to provide origin information for the products it sold, and those slaughterhouses in turn had to show the conditions that their animals live in, or the salary they paid for vegetable picking, or the environmental damage of the pesticides that overwhelm local ecosystems, they would also see a drop in businesses.

The vast majority of modern capitalism is finding some entity to exploit or enslave for a profit, and then covering that up with lies and marketing.

It is a great idea, but... (4, Insightful)

WindBourne (631190) | more than 4 years ago | (#30503950)

Lets break them up. The last thing that we need is have companies that are 'too big to fail'. We need more competition. If these companies that 'required' and accepted help, then we should break them up into at least 3 companies so that if any are ran into the ground again, we let them die.

Re:It is a great idea, but... (AIG, Citigroup) (0)

Anonymous Coward | more than 4 years ago | (#30504120)

One of the discoveries of the Citigroup fiasco is that you can too big to succeed situations.

Of COURSE it's a good idea (5, Informative)

popo (107611) | more than 4 years ago | (#30503952)

As many accountants have said: Show me a company who does not get audited, and I will show you fraud.

There are only two options here:

Option1: We the People get ripped off.
Option2: We the People are allowed to see exactly where OUR money went.

All other options are Option 1 in disguise.

Re:Of COURSE it's a good idea (0)

Anonymous Coward | more than 4 years ago | (#30504054)

We already know where all our money went: obscene bonuses. Option 2 is the same as option 1.

Wasn't this technique used already (2, Interesting)

lamadude (1270542) | more than 4 years ago | (#30503956)

during this year's big UK politicians expenses scandal? All citizens could look over the lists of expenses and find the abuses. I'm not from the UK, so I don't know how this story ended, perhaps somebody from the UK could fill me in?

Open source "investigation" (2, Insightful)

The_Duck271 (1494641) | more than 4 years ago | (#30503988)

You mean, like the open source "investigation" of the leaked climate change research group emails? That turned out well...

Will be a fun test of sovreign immunity (1)

SlappyBastard (961143) | more than 4 years ago | (#30503996)

Let's find out, in court, whether the shareholders or the government is sacred. This will be fun when the shareholders sue the government.

what would this accomplish? (1)

wakim1618 (579135) | more than 4 years ago | (#30503998)

Making public the emails of any large organization (e.g. US Dept of Transportation, Sierra Club, Red Cross/Red Cresent, Google) will mostly be fodder for the trolls and pundits. Any large organization will have some (stupid) individual employees or contractors who expresses racially or sexually offensive views, or make threats or talk smack.

Re:what would this accomplish? (1)

couchslug (175151) | more than 4 years ago | (#30504064)

If the entity is owned by the public, good. Everyone in it should be terrified to screw up and those not willing to be professional need shitcanning.

Let them live under military discipline, which would be appropriate for all sectors of government. Military discipline wouldn't cure everything, but
civilians have no discipline and it's amazing they can function at all. I'm not saying to actually militarise the government, just amend the Federal
code so government employees serve under a mirror system (including prison for infractions). Any company owned by the government should give the
employees the choice of swearing in or being instantly fired. We should have a punitive attitude towards bad companies, with the goal of whipping them into compliance and breaking them up so they don't threaten honestly run businesses. Corrupt companies are enemies of the people, and should be given orders with the expectation that they will be obeyed or the malefactors will do hard time.

Not clear on what the problem is (1)

khallow (566160) | more than 4 years ago | (#30504004)

I'm not clear on what these guys are worried about. As far as I can tell, there was no expectation that this money was anything other than wasted, tossed down a giant rathole. So if we find, that say it got spent on a really amazing pool party or lost again in the same way that the original money had been squandered? Well that meets expectations.

It's a start (4, Insightful)

mbone (558574) | more than 4 years ago | (#30504042)

I have no doubt that there is a lot of dirty stuff in those emails, so releasing them would be good.

Since clearly not everything could be released (HIPPA stuff, personal bank account numbers, etc.), this raises the question of who would remove the private information, and whether they could be trusted. Clearly, if this was done by AIG, an amazing amount of stuff would presumably be declared personal and private and not for release.

not only (3, Insightful)

phrostie (121428) | more than 4 years ago | (#30504048)

not only is it a great idea, it should have been a requirement before the bailout.

Pedant alert! (0)

Anonymous Coward | more than 4 years ago | (#30504078)

A new form of *open* investigation. Open source is a software development methodology.

Great success! (1)

Eggplant62 (120514) | more than 4 years ago | (#30504084)

After all the fanfare and comradery inspired by P.J. of Groklaw fame, we need to ask whether this is a good idea? It's an EXCELLENT idea. Many eyeballs make a heap of problems very shallow, to coin a phrase from Richard Stallman's work.

This is an insidious suggestion. (3, Insightful)

steve buttgereit (644315) | more than 4 years ago | (#30504086)

While it is certainly easy to suggest something like this for those evil people at AIG, it presupposes that those good prosecutors and men at law that would protect us from such evil themselves are actually good. In truth the situation is much more grey than that. Firstly consider that many prosecutors in the country are elected and the prosecutorial policy is originates in the politics of the various office holders. Are politicians so indifferent to their own self interest that such a policy as being proposed by the article could be executed in good faith? Of course not. Politicians, and those that serve at them, are as notorious as any 'fat cat' in using their position and power to their own benefit at the expense of the others. All this policy does is feed a sort of populist anger that garners political support for those that suggest it and at the expense of real justice for the small minority that it targets... regardless of their past transgressions. One should remember that enshrining rights, such as prohibitions against search and seizure without convincing a court, exist largely to protect minorities from majority exploitation.

The real sin in the AIG case, to be fair, was not any action of AIG at all. It was that we bought into the bogus notion that a firm can be 'too big too fail' and must be bailout out by Government. AIG made bad judgments and bad investments and its owners (shareholders, including big investment banks) allowed it to be managed poorly. The company should have been allowed to fail, something all those involved earned. What we did instead was reward the foolish risk taking made by the shareholders and the managers and, worse still, told future generations of shareholders and managers that taking these risks is OK... the government will bail you out if you lose so there really is no risk at all... you're too big too fail. Let em fail! Stop taking my savings, diluting my money, borrowing on my behalf to save businesses that by all rights have earned their failure (including all those that chose to have a business relationship). There are other insurance companies, there are other investment banks, and there are others capable of filling the gap responsibly. Sure none of them have such good friends as Geithner, Paulson, Obama, & Bush... but they can rise to the occassion.

awsome idea (1)

schleprock63 (1451297) | more than 4 years ago | (#30504106)

under the sunshine act, one would think they have no choice but must, by law, open their e-mails and any other correspondence to the public. we paid for for them, then we should have full access. and the excuse that this would make them less competitive is total BS.

Hillary took the bailout money (0)

Anonymous Coward | more than 4 years ago | (#30504136)

Government is a form of corruption.

Gov. is necessary for city ordinances, infrastructure, and defense. However, all social programs and bailouts are a form of corruption and government interference.

Look at Barney Frank...or Hillary taking millions in bailout money

Privacy violation ! (1)

redelm (54142) | more than 4 years ago | (#30504184)

... and a "Taking" of private property.

Those emails were made under certain expectations of privacy and confidentiality -- that they would be read by the recepients and authorized corporate officers/audit. To dump them to the public is a gross violation of those employees rights and shareholder rights -- the minority shareholders _do_ have rights.

Look at what happens in criminal searches and civil discovery -- anything that does not make it into evidence (much is disputed and requires judge's rulings) remains confidential. Investigators are granted extraordinary [search] powers, but also have consequent responsibilities.

This is data rape, and can have nothing but a chilling effect on legal communications (the badguys don't care). Prior restraint writ large.

Re:Privacy violation ! (0)

Anonymous Coward | more than 4 years ago | (#30504344)

I'm OK with this. I'll give them all the privacy and confidentiality that they give to their employees while using company equipment on company time.

Good idea? (0)

Anonymous Coward | more than 4 years ago | (#30504210)

Hell, yah!

The bankers are being scapegoated (1, Insightful)

Anonymous Coward | more than 4 years ago | (#30504306)

All this "Evil Bankers" stuff is getting ridiculous. The banks/bankers are just the scapegoats for a fundamentally corrupt and unsustainable system.

The magic with blaming the banks/bankers is that we cant get rid of them since we need them. Hence blaming them is the perfect way of maintaining things just the way they were.

Really Bad Idea (0, Troll)

arthurpaliden (939626) | more than 4 years ago | (#30504346)

This is a really, really bad idea.

For an example of why you have to look no further that the so called 'ClimateGate' scandal. Here you had a bunch of people 'cherry picking' phrases and code segments then using them completely out of context to cause a major up roar. Which because of its simplicity of presentation was able to draw in the masses of the uninformed public, media included, who took what was presented to them at face value simply because they wanted to believe.

Re:Really Bad Idea (0)

Anonymous Coward | more than 4 years ago | (#30504592)

Yeah, it's a terrible idea. There will certainly be some choice quotes, some career damaging quotes, some embarrassing personal items. What good will it serve? Will we decide to take our money back? Oh, it's too late. Will it somehow make AIG more profitable in the future and more likely to pay us back? I doubt it. Could it hurt AIG? Absolutely.

There is nothing new to any of this, it's messy when you run a business or make sausage. People don't like to watch, they instead look at the black ink at the end of most quarters and then create this imaginary image of how brilliant those guys must be and how everything is perfect. The real world isn't like that though, people get fired, have fights, win and lose battles, have egos, make mistakes, do things out of spite, etc..

I'll bottom line this for everybody, you may not agree but you know it's true: Nobody complained when they were getting 10+% on their 401ks and mutual funds for the last 10 years, show me the first person that went after "more conservative" lower yield funds and it'll be the first.. Nobody complained when their credit company gave them increases in credit. Nobody ever complained about the exotic different types of mortgages out there. And nobody complained about the very concept of "flipping houses" or what it does to neighborhoods and the market as a whole. I have yet to find an HOA that requires the owner to stay in the house for 2 years. Very similar to health insurance companies, there is a flaw in the business model of how we do mortgages, people with marginal credit translate in to bonds with higher yields, who doesn't want a higher yield? There is no incentive to lend to better borrowers. Nobody cares about any of that when everybody is making money though, they just want to nail someone to a cross when it all goes wrong.

Great Idea! (1)

Jeremy Erwin (2054) | more than 4 years ago | (#30504402)

It will distract the quote miners away from ClimateGate.

Coc(k (-1, Offtopic)

Anonymous Coward | more than 4 years ago | (#30504410)

reasons why anyonE 800 mhz machine

Mandatory (1, Insightful)

Anonymous Coward | more than 4 years ago | (#30504498)

But Spitzer consorted with prostitutes! He's as bad as Tiger Woods!

Won't somebody think of the children?

with a license to kill (1)

mnemotronic (586021) | more than 4 years ago | (#30504590)

Emails, that is. But please, no "frontier justice". The lawyers would miss their cut.

Citation needed (0)

Anonymous Coward | more than 4 years ago | (#30504618)

So having all those emails will cause journalistic investigation? The Climategate emails don't seem to have caused journalistic investigation.
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