Zombies R US(ofA)

As Stephen Colbert used to ask:

George W. Bush - Great President or Greatest President?

On the Tonight Show with Jay Leno, Obama tried to inform America why AIG was so pivotal in the Rape of Lady Liberty. He said AIG was just a normal insurance company until, in the search for more and more profits, grafted an investment bank on its back. And that investment bank operation got over involved in derivatives and other risky assets, primarily associated with the subprime mortgage market.

Yesterday I watched a video clip of Barney Frank, where he suggested that we file a shareholder lawsuit against AIG for fraud, as we as a country are the biggest shareholder in AIG.

Then it hit me: we as a country and economy are just like those Zombie Banks that are technically, non-technically, hypothetically, and every other -ally so beyond life support that they are undead. Not even Mary Shelley or all the King's men can bring them back to love and life.

At first I thought such a lawshit against AIG would serve some cathartic need, it is pointless. There is nothing to sue for. Our investments in these banks and financial institutions, call it a bailout or whatever, is dead. There may be marginal money there for operations, but a lawsuit by the United States would be frivolous because there are no assets in priority. What I mean is this: AIG, Bank of America, Citibank, Goldman Sachs, etc etc etc became involved in fraudulent activity years ago. And although Obama said what they did wasn't against the law, he did suggest that these financial institutions did not act in their shareholders' best interest. And they lost trillions.

If you know anything about shareholder lawsuits, a plaintiff attorney only has to find one person (and preferably a few) to file a lawsuit against a corporation along with a request seeking class certification. A class action lawsuit against AIG, BofA, Citibank, Wells Fargo, or General Electric's finance arm would bring any of these companies down. And hard. Now I can think of at least a hundred million people who could serve as lead plaintiff. And I am sure there is a Weil Gottshal, or a Lieff Cabraser Heimann & Bernstein, or a Bernstein Liebhard & Lifshitz willing to take such a case.

And what is the chance that such a lawsuit would be successful? Would it be that hard to show fraud? The only thing the companies have going for them is that such a massive discovery process would likely bankrupt a plaintiff firm, even one well capitalized. And any such suit would take priority over a suit by the Attorney General's office. So, all the 'good' money we have poured into these bad financial service firms will become attachable assets in such litigation. I mean if Hank Paulson and Tim Geithner couldn't remember to put strings on the money, do you think they protected the money against shareholder lawsuits? (And if they did, what did they know and when did they know it?)

So it appears that we may be at risk of having to bail these companies out again again again. Is this why Obama and the Fed are setting up a shadow banking system? Whether it is a class action lawsuit or a smoking gun or a butterfly flapping its wings in China, we are at big risk.

The only way out is to collectively agree that the zombies are not only bad, but that they can't be rehabilitated without the baptism of bankruptcy for the remission of sins (and obligations). And a truth commission. It is well known that if you are attacked by a zombie, you will become one. And as we are under attack, we must be very careful.

And there is something else too: we need to be able to say what it is that we want and then build it. We are so afraid to sit down and imagine what type of community, nation, or world we want to inhabit. Very few people have been having that discussion, although that seems to be changing. As Terrence McKenna says: "if you can't describe a reality, you can't inhabit it."





As we are on the topic of zombies, what are corporations anyway? Fictitious individuals granted to possiblity of immortality? WTF.