A Marshall Plan for AIG

With each passing day, the insurance giant is looking more like Western Europe after World War II--devastated, bankrupt and occupied by the American government.

As Congress conducts its equivalent of war crimes trials for AIG executives to recover a fraction of one percent of bailout money, the larger question for American taxpayers is how to rebuild, salvage and/or sell off the corporation, of which they now own 80 percent.

While there may be gratification in vengefully hounding the defeated, there could be much more long-term profit in enlisting AIG people in undoing the mind-boggling deals that led to the mess.

According to the New York Times Wall Street expert, "A.I.G. employees concocted complex derivatives that then wormed their way through the global financial system. If they leave--the buzz on Wall Street is that some have, and more are ready to--they might simply turn around and trade against A.I.G.’s book. Why not? They know how bad it is. They built it.

"So as unpalatable as it seems, taxpayers need to keep some of these brainiacs in their seats, if only to prevent them from turning against the company. In the end, we may actually be better off if they can figure out how to unwind these tricky investments."

But there is a less cynical way to look at it. Before the crash, AIG was a top-down company, but its Hitlers, Himmlers and Goerings are gone now. The mid-level people, some still there and many who have left, were doing their jobs back then under the rules that existed.

Couldn't they be invaluable to the Treasury in unwinding the deals they helped structure under the equivalent of a post-World War II Marshall Plan for the company that now belongs to taxpayers? Punishment is less the point than rehabilitation.

"Marshall Plan," Wiki tells us, "has become a metaphor for any very large scale government program that is designed to solve a specific social problem. It is usually used when calling for federal spending to correct a perceived failure of the private sector."

Exactly.