Tuesday, March 3, 2009

Wolves at the Gates

Rather, the scandal is that AIG could have earned billions of dollars by selling insurance against a meltdown, even as it was wholly incapable of paying out on those policies. I wouldn't be surprised to learn that Hank Greenberg was still a billionaire, even as the policies his company wrote have cost the average American household some $1,600. It's time for his wealth to be confiscated: it might be only a drop in the bucket compared to AIG's total losses, but it would feel very right.

Article, hat tip from Free Exchange.

Put aside whether Greenberg is still a billionaire or not. Suppose he still is for the purposes of this post. The idea that we can arbitrarily take money from a private individual because they erred - deliberately or not - because it 'feels right' is incredibly wrongheaded. You can find people who would feel good about pretty much anything. However, being a relatively civilized people, we have pesky things called laws, due process, blah blah blah.

If Greenberg or any of his colleagues broke the law, then fine, lock down the accounts and prepare the cells. But if they didn't, all we can do is create better laws and regulations for next time.

What's even more worrisome is that promoting the idea that Greenberg should be arbitrarily penalized, irrespective of law, assumes the existence of an individual, committee, whatever who is capable of deciding who gets punished and to what extent. This is way beyond slippery slope territory.

Yes, there is certainly a base desire for revenge in most all of us. It doesn't mean we should reenact Lord of the Flies.

POSTSCRIPT: Shouldn't some blame be assessed to people who bought all this insurance from AIG? Were they oblivious? Or were they just counting on if stuff blew up that a bailout was a sure thing? Are these 'sins' 'better' or 'worse' than selling the insurance?

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