Writing in the New York Times, former New York governor Eliot Spitzer and two co-authors argue that AIG should open its corporate e-mail servers to public scrutiny. They’re right. More than a year after AIG became a taxpayer ward, nobody has a clear picture of why and how the company collapsed. The three contend that a broad release of the company’s e-mail archives could help resolve many questions:

Before releasing its regulatory clutches, the government should insist that the company immediately make these materials public. By putting the evidence online, the government could establish a new form of “open source” investigation.
Once the documents are available for everyone to inspect, a thousand journalistic flowers can bloom, as reporters, victims and angry citizens have a chance to piece together the story. In past cases of financial fraud . . . e-mail messages and internal documents became the central exhibits in our collective understanding of what happened, and why.

The only problem with this proposal is that it doesn’t go far enough. While opening AIG’s e-mails to public scrutiny would clear up many still-unanswered questions — How did regulators miss the problems? Did anyone engage in deliberate fraud? — doing so wouldn’t settle every important issue.

If the Federal Reserve and other government entities really want to provide the answers that the public deserves, they should do at least two other things. First, they should make AIG undergo a comprehensive, fully independent, third-party audit to determine if it has any unaccounted-for liabilities. (The company’s byzantine structure and unusual business practices make this likely.) Second, a separate investigation should address AIG’s ongoing risk-management practices and culture. A recent Stanford Bernstein analysis suggests that AIG continues to take much larger risks than other comparable insurance firms and has major problems as a result. If this is true, it may set the stage for another taxpayer bailout.

Taxpayers own 80 percent of AIG. They deserve more openness and accountability.

– Eli Lehrer is a senior fellow at the Heartland Institute.