Most important legal question of all time Tom Smith

Does the U.S. Treasury have the authority to establish a conservatorship of the mega-insurance company, AIG? If the answer is yes, proceed with 21st century. If the answer is no, watch the financial system collapse.

OK, maybe it wouldn’t collapse. It just might collapse. Otherwise, they would not even be thinking about this. AIG has assets of about trillion dollars. It’s the counter-party of many, many insurance contracts with other financial institutions. I think, in truth, nobody knows what would happen if AIG declared bankruptcy (as they certainly could. They are (apparently) insolvent as hell.)

Somebody at DOJ or elsewhere where there are real lawyers needs to call the Treasury with the right answer (hint: it’s yes). If we can waterboard people who know when the next terrorist attack is coming, surely we can let the UST save the financial system. Get W to sign something. He knows how to do that. In Posner’s words, let’s be pragmatic about it, for heaven’s sake.