>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.

No, not yet. That's, I guess, how empires are made here, by things which were still legal at the time.