The senior managing director – a top-ranking banker – walked onto the crowded elevator, focus fixed on her Blackberry, pressed the elevator button and farted loudly. As the smell filled the elevator, as others nervously coughed, some covering up giggles, her focus stayed on the Blackberry. Four floors later she left, commenting to a colleague, “The elevators are vile. The janitors are always on some break.”

Another MD turned to me: “That’s why she earns the big bucks.” “Being able to fart?” I asked. “No, you idiot. Audacity. Audacity so great that you can fart on the elevator and blame it on someone else.” Maurice R Greenberg, the former chairman of AIG, has that kind of fart-in-the-elevator audacity. Greenberg, whose nickname is Hank, is suing the government for $40bn, claiming his old company AIG was treated roughly when it was bailed out in 2008. Greenberg was one of the largest shareholders of the company, and he’s suing on behalf of everyone who owned AIG’s stock. Greenberg wasn’t just a CEO. He is also a financial architect. He built AIG into an insurance giant that became so big, so entangled with Wall Street, that when it collapsed the government stepped in with a bailout package rather than see every bank in the country fail. The bailout package didn’t make anyone happy. Even at $180bn, it kept AIG barely alive. It didn’t punish the company: somehow the don’t-screw-this-up-again bailout enabled many AIG employees to keep getting million-dollar bonuses, including $165m to executives who had left the company in 2009. Benmosche, who earned $6m in his own bonus package last year, compared the criticism of the employees’ pay to “lynch mobs”.

On the great moral scale most people understand, AIG won a prize from the government: rather than failing and spending years in bankruptcy while destroying the financial system, the company survived. Any value the company has is better than zero.



So suing the people who rescued you might strike most people as ludicrous. It’s the most entitled and first-world of first-world problems. It might sound like a mountain climber with a broken leg complaining that the rescue helicopter only had tap water instead of bottled.



This is not the reaction most people would have. Most people, after self-reflection, would have been thankful they hadn’t lost everything, with a little more gratitude left over about the fact that they were, incredibly, spared a criminal investigation.



Here’s the truth: those people would make awful traders. They don’t have that fart-in-the-elevator audacity.



Greenberg certainly has that audacity. And, like the banker who got away with her elevator stinkbomb, Greenberg just might get away with his argument. Legally.



You just have to frame it correctly, in a way that Wall Street lawyers would approve. You have to compare AIG’s bailout to the rescues of other companies in 2008. Those other companies got really really really great deals. Citigroup? Its bailout was around $350bn. (And eight weeks later, it handed out bonuses.) Fannie Mae and Freddie Mac? A cool $187bn.



Compared to them, Greenberg could argue, AIG got a bad deal.



AIG wasn’t just any Wall Street firm. AIG had unconventional finances. The sin of Wall Street was over-investing in subprime mortgages, and AIG sold insurance to help them limit their damage. AIG was the seller of indulgences, washing away some of their subprime sins for only a small fee.



AIG was writing guarantees for the value of complex mortgage bonds. That insurance proved to be an awful bet for AIG, because those bonds ended up worth nothing. It also proved to be an awful mess for policymakers when mortgage bonds started blowing up, and AIG couldn’t pay out all that insurance, which nearly sent AIG towards bankruptcy and threatened the health of every other major firm.

To stop the inevitable collapse, the government took over AIG, taking a 92% ownership stake. They then paid all the Wall Street firms every penny of insurance AIG owed them on the bad mortgage bonds. The officials were making it up as they went along. There was no precedent to follow, because no firm had ever gotten itself into such a mess. It was a new, bolder level of disaster, something no one had ever seen before.



And that, six years later, is the opening for this new audaciousness. The government bailout rescued a firm to stop bad behavior. In the process it created entitlement, an expectation for even more special treatment.



Or put another way: I farted. Ugh, why doesn’t anyone do anything about that terrible smell?



I was at Citigroup when the financial crisis nearly took down the firm.

In the weeks before our bailout, the entire trading floor sat slumped, watching computer terminals broadcast our demise. Traders yelling into phones desperately asking for bids, salesmen yelling into phones, desperately searching for a client who hadn’t gone under. Two weeks after that, we were certain these would be our last days working, wondering if the whole world would be engulfed by the financial crisis.

At night, when the trading floor was usually just janitors and a few eager analysts, people could be found packing boxes, emptying their desks: “If we go under, I want to be the first out.”



Others sat staring at open spreadsheets, trying to figure out their personal finances: “I got two mortgages and three kids in private school. What the fuck am I going to do without my bonus?”



Eight weeks after the bailout the trading floor had a different mood – an entitled mood. Citigroup stock was trading at under $1 but the government’s checks had cleared. The trading floor was filled with people bitching about their bonuses being too small, some being cut by a third from the prior year. Hardly anyone among that group lost his job.



A senior trader, who had joined the firm two years earlier on a package that guaranteed him almost $2m a year, sat slumped, staring at the mute TV over the trading floor. Obama appeared, taking questions.



“That man will ruin this country, and he is going to ruin Wall Street. The government always ruins everything.”



It was pointed out that if it weren’t for the bailout, he wouldn’t have gotten his $2m bonus.



“No. I would have gotten it,” he said. “I would have sued them.”