Why weren't these guys forced to accept a "haircut" rather than being made whole?Not totally whole... AIG, Citi and others receiving assistance have had to transfer majority-ownership to the taxpayer. AIG has assets of around $1.5T in a normal market and its market cap was $200B in 2004. It can go there again, though probably not as a single entity.
If bankers knew these things were speculative then they were piling up risk and liability by misrepresenting speculative instruments as investment grade. Surely that's fraud.
"... They ne'er cared for us
yet: suffer us to famish, and their store-houses
crammed with grain; make edicts for usury, to
support usurers; repeal daily any wholesome act
established against the rich, and provide more
piercing statutes daily, to chain up and restrain
the poor. If the wars eat us not up, they will; and
there's all the love they bear us."
-- Shakespeare: Coriolanus, Act 1, scene 1
