Finally something we can agree on

American Insurance Group (AIG), brought all American political factions together for a moment or a few weeks maybe.

The circumstances of this financial meltdown are so confusing, at least this is something simple enough for us all to be similarly outraged about. Hundreds of millions in bonuses, after a thousand times that in bailout money to the company, given to employees of the very AIG Financial Products unit, regulated only by the OTS (ever heard of them?), is very easy to understand.

President Obama, the first sitting President to appear on a late night show, was asked by Jay Leno recently “shouldn’t somebody be going to jail?”

The President said that the circumstances that led us to this point were entirely legal (maybe he said they were not illegal).

Legal? Who in the heck makes our laws? Who decided the non insurance unit of AIG should be regulated by the OTS? Some call it just a hedge fund inside of an insurance company. What were they “hedging” anyway?

Back to some of the billions, why did some of the most brilliant and sophisticated speculating financial institutions in the world become “counterparties” to this unit which they had to know, because of their sophistication, had no reserves against these insurance products which carefully avoided the word insurance.

Billions of the taxpayers billions flowing into AIG flowed back out to honor the “counterparty” agreements that probably are a single point (there are others) of worldwide financial stupidity, which if it did not exist, would cause us to be talking about something else, perhaps enduring better times or hard times for some other reason.

Goldman Sachs (US) received maybe 13 Billion of taxpayer money.

Deutsche Bank (Germany) received maybe 12 Billion of taxpayer money.

Soc Gen (France) received maybe 11 Billion of taxpayer money.

The US taxpayer has stood in to make the counterparties whole all over the world. AIG was just a pass through entity.

Too bad Eliot Spitzer and other investigators earlier only found accounting fraud inside the insurance units, which reportedly are still sound. His rehabilitation began in earnest today by Fareed Zakaria on CNN, less than a year after his personal scandal. I saw much of the entire interview, felt it was really informative albeit full of the usual political posturing I see from everyone.

Fareed Zakaria is a great interviewer and the former New York State Governor was in good form and described some of our problems well but in the two and half minute snippet on the CNN website there was too much of the personal story and too little of the calamatous political dealings of the Washington-Wall Street web that AIG was “at the center of.”

He was not asked about the Roger Stone opinion that Spitzer’s own crackdown on Wall Street caused the firms to increase leverage because he took away the ability for them to make money in research and underwriting, and they looked for other ways to make money-like securitizing subprime mortgages. It would make for good material for a potential new soap opera or reality show “As the World Amortizes.” Stone and Spitzer “have a history”.