Bailouts: both moral hazard and fraud

So far this year, we have bailed out Bear Stearns, AIG, Fannie Mae and Freddie Mac, and also donated about a trillion dollars more to bail out Wall Street. The 3 stooges Bush, Bernanke, and Paulson have wasted our money. These companies have been cooking the books and that is why they eventually failed. It’s silly to think that these losses just came out of nowhere. I know there are many other companies doing the same thing. The latest news on top of AIG throwing half million dollar parties after being bailed out is reported by CNN.Money: Judge: AIG fraud worth $500M

Four former executives of General Re Corp. and a former executive of AIG (AIG, Fortune 500) were convicted in February of conspiracy, securities fraud, mail fraud and making false statements to the Securities and Exchange Commission.

Prosecutors filed court papers citing a study by its expert that concluded the fraud-related losses to AIG shareholders totaled $1.2 billion to $1.4 billion.

They cited another methodology by the expert that put the losses at $544 million to $597 million, but said either method is reasonable.

Droney rejected the higher estimate but said the lower range was reasonable. That finding and a determination that the fraud affected more than 250 victims will increase the advisory guideline sentence range.

The guideline range and a sentencing date have not been set yet.

The defendants challenged the estimate, saying there was no loss to investors. The defendants are Christopher Garand, Ronald Ferguson, Elizabeth Monrad, Robert Graham and Christian Milton.

Ferguson has said in court papers that he anticipated the government will advocate a loss amount that leads to a recommendation for life in prison. But prosecutors made no such recommendation, simply concluding that the defendants should receive a “substantial” prison sentence.

A report by the probation department recommended sentences of 14 years to more than 17 years for each defendant.

This is just another reason why we should not continue donating our tax money to these wasteful fraud bailouts. I wish this would get more attention, but on the eve of the presidential election this will not get the proper coverage.