President Obama’s Department of Justice announced last week that there would be no indictments in the collapse of AIG, an event which led to a worldwide economic collapse and cost the American taxpayer trillions. As someone who once worked for AIG I was shocked, but apparently that’s how this mystery ends: Hundreds of millions of victims, smoking guns in every room, and not a perp to be found anywhere.
Yves Smith is disappointed that PriceWaterhouseCoopers, the auditors who signed off on AIG’s financial claims despite mounds of disturbing evidence, escaped serious legal scrutiny. She observes that our “Potemkin” financial reform (her word) won’t remove the barriers that prosecutors face in pursuing secondary parties like auditors (although I believe the Supreme Court ruling she cited only addressed civil suits.) Not only is the auditor protected, but that allows the fraudster himself to use the defense that he kept his auditor informed – kind of like Bush and Cheney using John Yoo’s legal opinion to inoculate themselves from criminal prosecution.
Here’s another possible reason there won’t be a prosecution: Our economy was shattered by a syndicate, a ring, a cabal at the top of the financial pyramid. To move against any one of them – AIG’s Joe Cassano, the auditors, Goldman Sachs, or even the credit agencies – would trigger a chain reaction of rats turning on one another, summoning each other to testify, and spilling each other’s dirty secrets in an attempt to save themselves.