Congressman wants AIG leaders jailed

"No one has the right to get rich off taxpayer money," thundered freshman U.S. Rep. Alan Grayson, D-Fla., who spent the past few years in Iraq before he was elected to Congress last fall suing "war profiteers" under the Federal Claims Act,  while celebrating the passage, by the House banking committee, with some GOP backing, of a bill he co-wrote banning "unreasonable and excessive pay" at taxpayer-backed banks.

"An economy in which a bank executive can line his own pocket by destroying his company with risky bets is an economy that will spiral downwards." Grayson's bill, chairman Barney Frank, D-Mass., says, will stop that.

 But who's he talking about, really? I called Grayson to inquire. Excerpts:

Have you identified anyone working for American International Group as of today who is an actual taxpayer-robbing pocket-lining company-destroyer?
    "I had (AIG chief executive Edward) Liddy down here in front of the committee a couple of weeks ago. He wouldn't tell me."
So how do we know these nameless people are ripping us off?
    "I read their 10-K. That's their annual report, you know. Their business model was fraudulent. They issued so-called 'over-the-counter' derivatives for things they couldn't possibly make good on. You wanted to bet them interest rates would not go up 2 percent? You paid AIG a premium.
Don't companies bet on that stuff all the time?
    "They took the entire amount of the premium and called it profit. Then the people in AIG Financial Products took 30% of that premium and stuffed it in their pockets. And they took half a trillion dollars' worth of bets on the yield curve. That's betting short versus long interest rates. No way AIG could ever have made good on those bets. It's criminal fraud that had a nationwide and an international effect."
What criminal law did they break?
    "It's no different from a Ponzi scheme. I'd like to see those people put away. Once we find out who they are."
How are you going to find out?
    "Don't be surprised if you see a subpoena."
Don't Congressional subpoenas have a history of getting in the way of criminal prosecutions?
    "Some people think that. I dispute it."
Are you talking to anyone in the Justice Department about prosecuting these people?
    "I can't comment about that."
New York Insurance Commissioner Eric DiNallo and Pennsylvania Insurance Commissioner Joel Ario came before your committee and swore state regulation actually worked, and that, whatever its trading losses in London and New York, AIG's insurance companies weren't stripped, they're still solvent.
   "The 10-K disagrees with them. It's not that hard. They're all crooks."

He meant the AIG people, not the insurance commissioners.

Meanwhile, across town, President Obama was meeting with some of the bankers Grayson and his allies were harrying with their comp-limits bill. JPMorgan Chase & Co. President Jamie Dimon recounted part of the talk for CNBC's Erin Burnett.

"The Persident thinks we should be very cognizant of the needs and desires and anger around the country on compensation," Dimon said. He said bankers are sorry. Though, like Grayson's villains, Dimon's pentitents remain nameless: "A lot of mistakes were made." He wouldn't say by whom. Not, he added, by him, or JPMorgan. But some of those other bankers "went too far, obviously." But they've learned...

Obama, Dimon added, "is not against wealth, but probably -- I'm putting words in his mouth -- against wealth that you (haven't) created anything for it... I think he would like to see an awful lot of lot of self-restraint."