Wait. So THAT’S what the bailouts were about?

Matt Stoller

One of the reasons that no one went to jail for the elite control fraud that caused the financial crisis is because of the pervasiveness of the criminality. You couldn’t send one guy to jail without having that guy very publicly rat out everyone else. To get to a high level on Wall Street you had to be dirty, like in a corrupt police department. No one trusts the one guy who won’t take bribes. Which brings us to Maurice “Hank” Greenberg, the former AIG CEO who is now, for lack of a better word, ratting everyone else out.

AIG, of course, is the massive insurance company which was bailed out by the government, with the Fed taking an 80% ownership stake in 2008. The AIG bailout was a strange deal, and it was renegotiated many times over the years. In a normal clean financial company resolution, AIG shareholders would have gotten wiped out. In the bailouts for Goldman, Morgan Stanley, and most of the big banks, shareholders got to keep their shares. AIG shareholders, by contrast, got to keep a little bit of what they had, a sort of split the baby in half deal. Hank Greenberg, as a shareholder, is extremely angry that he was treated this way. He thinks that he was not given equal treatment to Goldman shareholders, and in that he’s right. Most of us think that he should have been wiped out, and Goldman’s shareholders should have been wiped out too, so there’s little sympathy for this very rich man. But it’s utterly true, and everyone (even the most bank-friendly journalist Andrew Ross Sorkin) is acknowledging that it is true, that the government treated AIG shareholders differently. Greenberg is alleging, with good reason, that the motive here was quite sordid.