Mr. Spitzer hit the target with his article, "The Real AIG Scandal." But he didn't hit the center ring.

He's pointed out that AIG's counterparties are being bailed out *twice.* No wonder they're suddenly reporting profits. Guess where those profits came from? Us.

But there is more to the story.

Turning junk debt into AAA-rated securities was a scam. Banks did it deliberately and knew it was a scam. There are criminal laws against misleading buyers of securities; why are they not being enforced?

AIG issued "insurance" with no reserves to back it up, in violation of statutes covering insurance. No, renaming insurance "credit swaps" does not make it legal. Why is no-one being prosecuted?

Why did the banks see a need for insurance? Because they knew what they were doing was risky, and the whole game that was being played was to stick someone else with the risk and take home the profit.

When Wall Street staggered into the realization that toxic debt and fake insurance had ensnared virtually the entire system, and that it could all come tumbling down, leaving no-one with profit and everyone with losses, they panicked and ran to the Government. Help!

The help we should have given was the help defined by statutes already on the books. Underwater banks? Seize them. Fire the executives. Cancel the stock issues. Reorganize them. Strip assets. Sell off chunks or stand up a healthy bank.

The help we should have given AIG was to put it into bankruptcy court. It has a negative net worth. At that point the Government could go to the court and offer to buy it for a dollar. In a bankruptcy the court will decide which contracts to honor or void. Guess which category executive bonuses falls into.

Being enlightened, I would have liked to see us, the taxpayer owning AIG, refund all the counterparties, both foreign and domestic, exactly what they paid for fake insurance. That's fair; it leaves those banks in exactly the shape they put themselves in before paying out for the fake insurance. If they are then healthy enough to survive, good. If they are not, seize them.

The rescue of foreign banks should be up to their own taxpayers. It should not be our responsibility to rescue them from their own toxic assets.

Nor should stock owners of failed corporations be rescued. There is no economic theory which can justify such a rescue. Yet that is exactly what has happened under Geithner, Bernanke and their ilk. That's subsidization of the rich, folks. Reverse socialism.

Independent economists are appalled; only Wall Street mouthpieces are cheering for what is happening. (And only Wall Street mouthpieces were ever allowed to testify before Congress before the bailout was passed.)

So now all the illegal scamming has a new victim. You. Me. Every taxpayer. And Wall Street is showing a profit. The scam paid off after all.

Change you can believe in, huh? If only.

You hit the nail directly on the head!!!

Why is Standard and Poors - who were bribed to give AAA ratings to all this toxic junk - not being raided by the FBI right now?

Maybe because the Goldman Sachs guys who run our government don't want to see that the paper trail leads right to their friends, families and associates.

The S&P ratings arm publishes OPINIONS. Opinions are protected by the 1st Amendment. There were not contractual guarantees, they were just opinions.

hey degsme - you obviously have no clue about what the rating agencies do- and the role they played in the current crisis. But I guess you are free to keep typing.

Really?

Show me where a rating's agency is under any sort of actual obligation to anyone. And also where my analysis in this thread is factually wrong?

the ratings agencies, Moody's, S&P etc. are ostensibly arm's length reviewers of a particular security, but they are protected by the fact that they claim to simply be publishing opinion.

And publishing opinion is Am 1 protected. If you believe differently then it is YOU who does not understand how ratings agencies work

To the OP: everything you suggested makes good sense. Unfortunately, the solutions you brought up cannot be mentioned in this country, because the know-nothings will scream 'SOCIALISM' - which is apparently more scary to the general populace than the bogeyman behind the door.

Taxpayers took the hit for the S&L debacle because several members of Congress, including John McCain, were involved. I will not be surprised when congressional ties to AIG are revealed.

We do need change, but it doesn't involve changing back and forth between Republicans and Democrats every four years. We're just electing one Mo after another. Mo a Dis and Mo a Dat. We need something like the old Progressive movement, but that would require some leadership by people who held public office for reasons other than self-aggrandizement.

The First Amendment has nothing to do with the issue.

As to whether an opinion is actionable, it depends, as we lawyers always say. If you tell me something and expect me to rely on it and I do rely on it and my reliance is reasonable, I may have a claim for misrepresentation against you. Whether Moodys et al. couches their opinions in asuch a way as to avoid any liability to third parties, I don't know, but this is basic tort and contract law, not a free speech issue.