In the aftermath of the inquisition of Edward Liddy of AIG yesterday, the commentariat is offering one of their favorite narratives, hypocrisy; and Claude Rains saying that he’s “shocked, shocked to find that gambling is going on in this establishment,” to describe the utterances of the various Congresspersons who vented all over Mr. Liddy yesterday. Unfortunately, I don’t think hypocrisy is really the proper narrative, either for Congress’s, or for the Administration’s, “outrage.”
What’s more likely at issue is the idea that if Congress and the Administration do all they can to avoid infringing on the “prerogatives” of those firms that have become public wards or welfare cases, the firms themselves can be trusted to act responsibly and not abuse the public trust. The outrage in Congress and in the administration is not a manifestation of hypocrisy. It is about being scorned. It is about being “dissed.” It is about AIG doing business as usual after the politicians made extraordinary efforts to trust the class of financial welfare recipients by removing that provision in the stimulus bill that would have mandated constraints on compensation. And, most of all, it is about AIG risking the whole recovery and re-investment program, playing into the broader narrative that capitalists cannot be trusted to rein in their greed, even when their whole financial house is burning down, and saying, in effect, as they depart the stage:
“Screw you, ‘I’m all right, Jack’”