[Guest post by DRJ]
While the lawmakers on Capitol Hill angrily debate the $700B bailout, the FBI has opened investigations into the 4 institutions that helped make the bailout necessary:
“Two law enforcement officials said the FBI is looking at potential fraud by mortgage finance giants Fannie Mae (FNM) and Freddie Mac (FRE), Lehman Brothers Holdings Inc. (LEH), and insurer American International Group Inc. (AIG)
A senior law enforcement official says the inquiries, still in preliminary stages, will focus on the financial institutions and the individuals that ran them.”
There may have been no laws broken here but these investigations could help those like Senator Christopher Dodd who worry “the authors of this calamity” will walk “with the usual golden parachutes while taxpayers pick up the bill.”
Secretary Paulson shared the lawmakers’ anger and exasperation but reiterated that the proposed rescue plan is designed to benefit taxpayers, not “fat-cat Wall Streeters.” I agree with Secretary Paulson. Letting the US financial markets
crash plunge in order to punish a few Wall Street executives is like cutting off your nose to spite your face. It won’t make US investors (most of whom are also taxpayers) feel better when their investments decline to pennies on the dollar that Wall Street was punished, too.
So these companies and CEOs may spend years dealing with and worrying about federal investigations of their actions. And let the rest of us avoid the turmoil that will surely result if there is no bailout.