No criminal charges will be filed against Joseph Cassano or anyone else at AIG, lawyers have announced.
At first blush, this sounds outrageous–yet more failure to punish those responsible for the financial crisis–but in at least one important respect, it’s very good news.
Criminal charges against Cassano and other AIGers would have been greeted with near-unanimous applause, no matter how flimsy the case. Prosecutors who brought the charges would have been acclaimed for their toughness and heroism–and, even if the case eventually failed, would long since have moved on to the more lucrative side of the business (defence). Politicians would have cheered the toughness of the new regulatory regime. The public would have felt that in some small measure, justice would have been done. And so on.
So why is it good news that charges weren’t filed?
Because, despite crawling all over AIG for two years, Federal prosecutors apparently didn’t find enough evidence to hang criminal charges on. And, to their great credit, they didn’t go ahead and file charges anyway, which would have been the far more popular move. So the good news is that our justice system still appears to be focused on enforcing the law, rather than bending to popular opinion.
Cynics will say that the reason the Feds didn’t find evidence of crimes was that Cassano, et al, were smart enough not to leave any tracks. And that’s always possible. But it’s also possible that, as at other financial firms, there was no evidence of crimes because no crimes were actually committed. Being short-term greedy, betting the farm, and destroying your firm, it turns out, wasn’t against the law.
Given that taxpayers were (and are) on the hook for those bets, of course, it SHOULD BE against the law to recklessly gamble with other people’s money (namely, ours). But at the time it wasn’t. And, at least in part, we can thank two decades of de-regulation for that.
Now, not being guilty of crimes, of course, doesn’t mean that Cassano and his colleagues at AIG weren’t guilty of something else–gross negligence. Cassano & Co. gambled so recklessly that they destroyed their entire firm and forced taxpayers to step in with a ~$150 billion bailout. They also got paid hundreds of millions of dollars to do this–because AIG’s incompetent management and board of directors applauded their every move.
That the management and board of AIG got paid so well to fail so miserably is outrageous. Their conduct may not have been against the law, but it was against every principle of duty, prudence, and responsibility. AIG shareholders–and the American public who eventually had to clean up the mess–deserved better.
If there were any real justice here, AIG shareholders would be able to claw back every penny of the hundreds of millions of dollars that Cassano & Co. and the AIG board were paid to gamble recklessly at our expense. That we can’t do that–or won’t–is a crime.