The USA gov't was just as much at fault for the global meltdown as was the financial companies that spawned the CDOs, SIVs, swaps, derivatives, etc.
News flash: "WaMu sues FDIC for BILLIONS" ...
First, the rules on Mark to Market are FLAWED and were improperly applied, resulting in arguably excessive write downs. The FASB recommends using "cash flow method" of evaluation. The gov't, the financial co's, and their auditors decided to use "last trade" valuation even when it was obvious the last trade was a "distressed trade" as anyone who watched the Committee Hearings and Testimony would know.
If this gets to court, time's passage, plus the new FASB and SEC rules (aka: rules changes), will prove the markdowns were erroroneously, if not criminally, excessive, the capital was adequate, and any judge would be forced to hold the gov't accountable. The FASB stated the banks either didn't have the people knowledgable enough, or didn't have people at all, to value their holdings on Mark to Market cash flow basis.
Soooooo, why is the FDIC closing banks, ANY BANKS, before the FASB and SEC rules changes hit the light of day, as those changes WILL surely alter the CAPITAL RATIOS to the benefit of ALL financial companies and their stock holders.
Hindsight is 20-20, and a couple of years from now history WILL record that FLAWED Mark to Market and the USA gov't FASB, SEC, FDIC. US Treasury, and the FED made multiple MOUNTAINS out of a mole hill called "Mark to Market", threw needless BILLIONS at financial companies and banks only to undermine those companies (and their employees) that accepted bailout money, and the court case fallout will seem endless.
Second, the employees in question are under no obligation to stay. Even if you want to argue it was their creations as the root cause of the debacle ... it was MANAGEMENT that adopted and implemented their creations. Then, when the market vaporized, it was apparent the creations were flawed, but Mark to Market FLAWS exasperated the problem. The gov't doesn't have anyone with the expertise, (or the legal authority - Congress will have to design a framework and pass laws that do not yet exist) to unwind the CDOs, SIVs, swaps, derivatives, etc. positions. Hence - NO BANKRUPTCY, hence the AIG and the gov't needed these people to stay on to avoid further collapsing of the global economy. Expect MORE lawsuits to follow. [more]