Crossposted at Daily Kos

The AIG story might really be getting some traction. Not solely in the general, vague sense most of us possess that the bailout was not in the best interest of the nation, but in addition to that, in the very specific sense that particulars of the conduct engaged in by Ben Bernanke (Fed Chair), Tim Geithner (NY Fed President), Hank Paulson (Treasury Secretary), Lloyd Blankfein (CEO, Goldman Sachs), and others, were in direct contradiction to basic constitutional, legal, regulatory, business, and social principles.

It is not just the econ and finance press that is talking about the most recent report [PDF warning] from the Special Inspector General of the Troubled Asset Relief Program. CBS News has been talking about the story and The New York Times has decided to delve into the issue.

What I would like to do is reflect on the implications for our role as citizens and Democrats. As I explored a couple weeks ago when looking at the particulars of this development

The most recent revelation in the saga presents us with an intriguing political question. Once the facts become undeniable, the details beyond dispute, what are we going to do about it? What if those implicated in the affair cross traditional partisan lines? Do we elect more and better Democrats by holding Democrats accountable, or by excusing conduct which would be objectionable were it undertaken by Republicans?

We can say clearly and directly that senior officials at the Fed, Treasury, and major financial firms engaged in theft. Not just in the general public policy sense of bailing them out, but (also) in the specific acts of omission and commission that formed the terms of the bailout. And we know they know that what they did was wrong, because they have fought tooth and nail to prevent transparency, from oversight by the Congressional Oversight Panel and SIGTARP, to fighting Bloomberg News’ FOIA requets, to not even being able to tell legislators where the money went.

Martha Stewart served jail time. Bernie Madoff became a hated public figure almost overnight.

Yet, these individuals’ negative impact on society hasn’t even meant professional ruin. Geithner was promoted. Bernanke will be re-appointed. Blankfein still runs Goldman. Paulson retired a wealthy man.

Until this fall, it was generally thought that the lack of haircuts on the underlying debt obligations was due to some sort of good-faith oversight, some lapse that can be explained by the hecticness of the panic of the near collapse of the Universe As We Know It. Now, however, we know a different story.

These men decided by royal decree that they would circumvent the Constitution, regulatory norms, standard business practices, and all other forms of social propriety. They decided they would just declare that not only would they bail out AIG, but then, on top of that, they would interfere with the normal process of renegotiating debts with creditors to guarantee that creditors would receive 100 cents on the dollar when the market value of the payoff was significantly less than that.

It’s kind of like if you run a construction business, and your brother works for the government, and he awards you a contract to build a road. That raises some awkward questions. But then on top of that, say that he decides to pay you twice what would otherwise be reasonable. Regardless of whether you were the best contractor for the job, whether that was the right decision, the additional payment to you is not justifiable under any circumstances. That’s a conspiracy to defraud the government. And probably lots of other things a well-funded prosecution team could unearth. You know, like those people we send after petty thieves and low level drug dealers.

Would we allow that government official to keep his job? Or would we demand that that corruption be stamped out, removed by our political leaders? Is it okay if a Democratic politician says it’s okay?

If we’re not willing to state bluntly that theft is theft when it is clear, then no conduct with more of a gray area will ever be challenged or changed. We will just continue rewarding the very people who have no business running our country, and more to the point, we will encourage this kind of behavior in the future. Indeed, why shouldn’t the big financial companies just expect that taxpayers will make them whole whenever a business deal goes bad?

Change means doing something differently. We know what doing the same ‘ole same ‘ole gets us. It gets us the same ‘ole same ‘ole. Perhaps if Bernanke, Geithner, Paulson, Blankfein, et al, had delivered a good society for the rest of us, we might be more forgiving. But they didn’t, so that’s a moot thought. We prosecute people who steal $100. What do we do about people who steal much, much more?