The Inquiry that Should be Raised

Former Governor of New York Eliot Spitzer has been talking about the AIG scandal and the issue of bonuses. An interview with Air America's Mark Green can be heard here.

While speaking to CNN’s Fareed Zakaria, Spitzer spelled out Wall Street's failure of judgment . He reiterated that the AIG bonuses are not the heart of the current financial problem. He believes that the focus of the problem should be on how AIG used the bailout money and where the money was funneled into.

Spitzer also told Zakaria that recklessness, greed and financial experts' misunderstanding of capitalism got us into the current financial crisis.

When AIG initially received $80 billion -- a decision that was the consequence of a very brief meeting of the president of the New York Fed, the secretary of the Treasury, perhaps Chairman Bernanke and arguably, some reports say, the chairman of Goldman Sachs -- $80 billion, virtually all of it flowed out to counterparties, $12.9 billion to Goldman Sachs.

Why did that happen? What questions were asked? Why did we need to pay 100 cents on the dollar on those transactions, if we had to pay anything? What would have happened to the financial system, had it not been paid?

According to Spitzer the issue of bonuses "touches us viscerally." However, the real issue invloves the money that AIG gave out.

The real money and the real structural issue is the dynamic between AIG and the counterparts. The bonuses we think are 164 billion dollars...These counter party payments are tens and tens of billions of dollars.

Watch 3 parts of the Spitzer interview:

Part I: The "Nature of the Inquiry that Should be Raised"


Part II: Unjust Enrichment


Part III: The Role of Media