Megan McArdle on the problem with just canning all the execs at the failed banks:
So I'm distressed to see Tim Burke, of all people, making these kinds of statements about AIG:
"Considering that the 11-year veteran executive VP says that he's not at all accountable for AIGFP's losses because he wasn't involved at all in the CDS trading and knew nothing about it, maybe the 26-year old MBA might do a fair enough job."
Really? Really, maybe a 26-year-old MBA might do an okay job of liquidating the financial products division of the world's largest insurance company? I was a 28 year old MBA from (she noted modestly) one of the top finance programs in the country, and let me assure you that there is not the faintest whiff of a possibility that I or any of my classmates could have done an adequate job. We would have cost the taxpayer billions.
Among the necessary assets we would have lacked: 1) adequate skill to maintain the company's portfolio trading strategy in a really screwed up market until they could be wound down 2) contacts in other firms who could buy either our securities, or our line of business 3) experience in executing trades so that they make, rather than lose, money 4) knowledge about current market conditions 5) experience with complicated transactions.
This kind of hyperbolic speculation about an industry which he, respectfully, knows nothing about, is the exact opposite of how thoughtfully he approaches the institutional problems of his own industry.
What I find really worrying is that neither he, nor most of the other normally thoughtful commenters making these kinds of statements, appear to give any credence at all to the possibility that this just might be really, really hard--that it simply might not be a matter of throwing a lot of well-meaning guys in there to replace the jerks currently running the place, and by applying the cleansing forces of American middle class values and good old fashioned common sense, make everything all right again.
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