by Calculated Risk on 12/19/2009 09:06:00 PM

Eliot Spitzer, Frank Partnoy and William Black write in the NY Times: Show Us the E-Mail

A.I.G. was at the center of the web of bad business judgments, opaque financial derivatives, failed economics and questionable political relationships that set off the economic cataclysm of the past two years. When A.I.G.’s financial products division collapsed — ultimately requiring a federal bailout of $180 billion — those who had been prospering from A.I.G.’s schemes scurried for taxpayer cover. Yet, more than a year after the rescue began, crucial questions remain unanswered. Who knew what, and when? Who benefited, and by exactly how much? Would A.I.G.’s counterparties have failed without taxpayer support?

The three of us, as experienced investigators and prosecutors of financial fraud, cannot answer these questions now. But we know where the answers are. They are in the trove of e-mail messages still backed up on A.I.G. servers, as well as in the key internal accounting documents and financial models generated by A.I.G. during the past decade. Before releasing its regulatory clutches, the government should insist that the company immediately make these materials public. By putting the evidence online, the government could establish a new form of “open source” investigation.
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We would like to understand whether the leaders of A.I.G. understood that they were approaching a financial Armageddon ... We would like to see how A.I.G. was able to pay huge bonuses to its officers based on the short-term income ... We would also like to know what regulators knew, and what they did with the information they had obtained.

It is amazing that we still don't have these answers - especially about the regulators, with an explanation of how the new process would have caught the AIG problems.

But this does give me an excuse to repeat Eric's great AIG cartoon! Click on cartoon for larger image in new window. Cartoon from Eric G. Lewis