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AIG made some horrible decisions. They invested in mortgage backed securities that were comprised of mortgages that were given to people who wouldn’t be able to afford them. AIG knew what they were doing but they figured the risk was small because the housing market was doing so well for so long. They were wrong.

Now our federal government is preparing to give AIG a $85B bridge loan to recover. Essentially, removing the risk from AIG. The big question to me is, who assumed the risk in AIG? Is the former CEO of AIG, Martin Sullivan, returning his $26.7 million 2006 salary? Are the other executives giving back their last 5 years of profits? Are they giving back their bonuses? The Sales people that bet on these mortgage backed securities and made huge commissions (not to mention the rating agencies) are they giving back their commissions?

Why must we the people (the federal government) and the workers of AIG assume the risk of some shitty fucking bankers while the bankers walk away with millions of dollars? Fuck that.

This is not capitalism.

(video: Milton Friedman discussing free markets)

Point of irony:
The banks, especially the mortgage industry, lobbied hard for deregulation of the lending industry. They wanted to loan money w/ greater ease and assume the risk w/ huge adjustable interest rates. The government wouldn’t allow this practice historically, but through conservative lobbying for free markets, they were able to deregulate. This deregulation is largely responsible for this collapse. Ironic eh?

Point of fear:
The collapse of the banking industry will result in a greater amount of shitty government regulations that add more costs than benefits. (See: Sarbanes-Oxley Act)