WSJ Editorial: The Real AIG Outrage

The Wall Street Journal's take on the AIG mess from today's edition:

http://online.wsj.com/article/SB123725551430050865.html

Highlights:

Given that the government has never defined "systemic risk," we're also starting to wonder exactly which system American taxpayers are paying to protect. It's not capitalism, in which risk-takers suffer the consequences of bad decisions. And in some cases it's not even American. The U.S. government is now in the business of distributing foreign aid to offshore financiers, laundered through a once-great American company.
...

The Washington crowd wants to focus on bonuses because it aims public anger on private actors, not the political class. But our politicians and regulators should direct some of their anger back on themselves -- for kicking off AIG's demise by ousting Mr. Greenberg, for failing to supervise its bets, and then for blowing a mountain of taxpayer cash on their AIG nationalization.

Whether or not these funds ever come back to the Treasury, regulators should now focus on getting AIG back into private hands as soon as possible. And if Treasury and the Fed want to continue bailing out foreign banks, let them make that case, honestly and directly, to American taxpayers.

The focus of our political class on the excesses of the private sector really is astounding in its hypocracy. Not that the private sector is entirely guiltless, but the amount of money wasted on AIG salary bonuses is chump change compared to the waste the government itself generates.