Keeping Taxpayers in the Dark

Arianna Huffington writes:

While we're rewarding the risk-taking shareholders of various zombie banks -- not to mention the mysterious, unconfirmed counterparties to AIG's serial recklessness -- how about rewarding the taxpayers, if not with an actual return on our bailout investment then at least with information about what exactly is being done with our money? It's time to call in all the unknowns.

Instead, we're greeted with a wall of manufactured complexity by the people whose job it is to make known unknowns into known knowns. There is nothing complex about the way CEOs like John Thain, Ed Liddy, Lloyd Blankfein, John Mack, Vikram Pandit, and Ken Lewis turned bailout billions into Wall Street bonus money -- and no justification for keeping taxpayers in the dark about the giveaways (Vanity Fair's Michael Shnayerson breaks down the jaw-dropping and blood-boiling numbers).

So who, exactly, has our money -- and why don't we know? AIG CEO Ed Liddy prefers not to say. Same with the Fed, which refused a congressional request for the names of AIG's derivative counterparties. According to unnamed sources, the list includes Goldman Sachs, Merrill Lynch/Bank of America, Morgan Stanley, and Deutsche Bank.

It's worth noting that, thanks to the industry-written 2005 Bankruptcy Bill, derivatives claims are not stayed in bankruptcy -- so the financial institutions that gambled and lost would nevertheless be the first ones paid off. Isn't gaming the system fun?

It doesn't take a Ph.D. in economics to know that you can't have CEOs whose companies have received billions in bailout funds going to court and threatening to sue employees to keep the public from knowing which executives pocketed millions in bonuses -- and you can't have them pretending that no bailout money was used to pay said bonuses.

You can't have insolvent banks pretending that the problem is one of liquidity, and then using taxpayer money to protect their balance sheets instead of lending money to credit-worthy businesses and consumers.

And, ultimately, you can't allow the same people who were part of the problem to be part of the solution. There is absolutely no way on earth that the same flawed thinking that got us into this mess will ever get us out of it. We need to clean house, taking the steering wheel away from the executives and the compliant boards that steered us over the economic cliff. They didn't get it then; they still don't get it now (see handing out bonuses, hosting spa retreats, redecorating, and throwing lavish parties while America teeters on the verge of economic collapse).

That is something we all know that we know -- even Tim Geithner and the experts at CNBC.