Steve Pearlstein Excoriates AIG Chief Edward Liddy

This morning I linked to a WaPo op-ed by Edward Liddy, the chief executive of A.I.G. in which he says, basically, that there was no way he could have avoided paying the $165 million in bonuses to current and former A.I.G. employees because, well, a deal's a deal.

I missed, however, this column by Steve Pearlstein, in which he rips Liddy into a million liddle pieces-- excoriating him for a lack of creativity, and a failure to understand that it's no longer business as usual on Wall Street.  

Here's where it gets good:

After all, if the government hadn't stepped in, AIG would have gone bankrupt and those whiz-bang traders could have lined up with all the other unsecured creditors at the bankruptcy court to see how much money they might receive three or four years down the road. And the government could still put the company into bankruptcy anytime it chooses.

Moreover, the Justice Department would surely have been within its rights to launch an extensive civil and criminal investigation into whether those bonuses were granted as part of an ongoing conspiracy to defraud shareholders -- a conspiracy in which the traders were knowing participants. As part of that investigation, prosecutors could have also prepared a public report to the Treasury, the Federal Reserve and Congress listing the names and home addresses of all the traders who were slated to receive the bonuses, along with a detailed description of their role in creating the mess that brought down the company. There could even be a chart listing their salaries, bonuses and other perks over the past decade.

Pearlstein is right on, here.  Liddy's inability to anticipate the backlash this has caused, and his staggering inside-the-box thinking is indicative of an endemic failure to comprehend how the ground has shifted. So many of the old rules just don't apply anymore.