Hillary A. Sale
Hillary A. Sale - 
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Steve Chiotakis: Some of the key figures in the last bailout are answering for their actions right now on Capitol Hill. Joseph Cassano headed up the AIG Financial Products unit that blew up. Cassano says he told the truth about the company's
losses and defends its compensation plan. He and Goldman Sachs President Gary Cohn are testifying to the Financial Crisis Inquiry Commission. So far those executives have been unapologetic, saying they really believed their risky financial products would pay off. Hillary Sale is law and business professor at Washington University Law School in St. Louis. Professor Sale, welcome to the program.

Hillary Sale: Happy to be hear.

Chiotakis: I want to play this cut for you. This is commission Chairman Phil Angelides starting things off this morning with a movie reference.

Phil Angelides: As I've explored this world, I feel a little like I've walked into a bank, opened a door, and seen a casino as big as New York, New York. Unlike Claude Rains in "Casablanca," however, we should be shocked, shocked that gambling is going on.

Is he right? Is it really like a casino?

Sale: It is a lot like a casino, and gambling is a really good word for it because there's no regulation and no transparency.

Chiotakis: Goldman, for one, professor, is facing legal trouble over derivatives that it created. I mean, how difficult is it to prosecute these kinds of trades?

Sale: Well, it's not so much the trades as it is the disclosure, which is the funny SEC line. Because they don't have the power to regulate these instruments, they have to go after what Goldman said or didn't say. On paper, they have a good case.

Chiotakis: What are you watching most closely about cases coming down the pike?

Sale: Well, this is a big case in the sense that Goldman has always been sort of the favorite child of the banks and the most popular one, and obviously its reputation has taken a beating. So what comes out of this will be interesting. Other cases will be hard to bring unless the SEC brings them.

Chiotakis: You know, Congress is nearing the close of this long battle over derivatives, too -- with perhaps the passage of financial reform -- do you think lawmakers will get a handle on this?

Sale: I think the reform bill is a good start, but it's clearly insufficient.

Chiotakis: Why is it insufficient?

Sale: Well, some of the biggest pieces of the reform bill have been and are being watered down. I don't think we should panic though. The New Deal took five years in Congress. We ought to give them the time to work it out.

Chiotakis: All right, Professor Hillary Sale over at the Washington University Law School in St. Louis. Professor, thanks.

Sale: Thank you.