As we find out more about the AIG situation, the more amazing it seems to be.  However, having been a 'Master of the Universe' for over twenty years, I must say I am not surprised.  There is a thoughtless quality to much of what Wall St has become.  It wasn't always that way.

It amazes me that Edward Liddy allowed his people to be thrown under the bus when he so easily could have stepped forward and explained that the people getting paid were people brought in to unwind the Credit Default Swap mess.  It is also amazing to me that he didn't have enough sense to make sure their compensation wasn't called a 'bonus'.

Something happened on Wall St during the 1980s.  Where once there had been a patrician prudence to the character of Wall St, in its place there grew a greedy arrogance that completely eclipsed the best interests of the clients and the all-important foundation of trust that enabled billions of dollars to be traded on word of honor alone.

The entire AIG mess was caused by weak management that didn't stand up to rogue employees because they were making a lot of money for the firm.  The same thing happened at Drexel Burnham Lambert when Fred Joseph didn't have the guts to fire Michael Milken. 

I loved working on Wall St.  There is no place like it that I have ever been because so many of the people you work with are extremely bright.   Unfortunately, it is a standard complaint that the top managers are often not the brightest bulbs in the chandelier.  This is because the geniuses are all doing the deals and don't want to be bogged down with dull management duties. 

It used to be that the Partners or the Boards would demand prudent adherence to certain conservative leverage ratios, but as the products became more exotic it was more difficult for many of them to decipher the risk involved, so they sometimes held their questions for fear of looking stupid.  I remember one particularly brilliant mathematician who set out to devise a way to hedge Corporate Bonds.  He came up with all kinds of formulas and charts and assured everyone it would work.  Those of us in the trenches knew it would never work, but he had the department managers snowed.  Fortunately, a few of us sat him down and pointed out why his idea wouldn't work before the firm dropped a $billion into the scheme!

Wall St really needs to be cleaned out.  Much of it is currently like having a bunch of teenagers running a munitions factory  - it needs adult supervision again.