To the editor: The lawsuit by former American International Group Inc. chief Maurice R. Greenberg claiming punitive treatment by the government toward AIG in the $182-billion emergency bailout during the financial meltdown of 2008 is an object lesson in the dangers of engaging in capitalism without tears. ("Maurice Greenberg puts U.S. handling of AIG bailout on trial," Nov. 9)
In a true capitalist system, AIG would have been left to sink or swim. There is no such thing as too big to fail — or, more accurately, there shouldn't be. The government intervened to avert a bigger collapse, and this is the thanks the taxpayers that picked up the bill get. Meanwhile, the financial industry and AIG have recovered far better than the average taxpayer has.
This lawsuit is unbelievably unfair and will make any future bailouts very unlikely. AIG looks like a bunch of ungrateful bums.
I wish there was more concern for the communal well being, but that is clearly naive.
Denise Frey, Santa Barbara
To the editor: Greenberg's case threatens to refocus attention on the single most outrageous aspect of the financial meltdown.
Credit defaults swaps have nothing to do with insuring against loss on an investment. Anyone, even someone with no interest in the original debt or security, can bet on the credit instrument going into default. When Goldman Sachs received a payout of 100% on its credit default swap investment, it was a direct transfer of wealth from the shareholders of AIG.
Had AIG gone into bankruptcy, the casino mentality behind Wall Street would have had no chance of surviving judicial scrutiny and all such investments would have been shown up as the valueless riverboat gambles they were. It is as if a thief, having been cut out of the take by his partners in crime, takes his case to court and asks to be made whole out of public funds.
John Stevenson, Ramona
To the editor: I am repulsed by the hubris of financial executives and their lawyers, and now I must extend that to the judiciary.
I am mortified that Judge Thomas C. Wheeler ignores the context of imminent global financial collapse, which even with a bailout remains tenuous. Both Wheeler and David Boies, Greenberg's lawyer, subscribe to the legal concept of protecting property owners; however, as Boise implies, this is reserved for financial executives that caused the problems, not for the general public that actually realized the pain.
How can Boies and Wheeler live in our society and ignore the human cost of their arguments?
Andrew Barnes, Costa Mesa