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AIG bailout trial may be good therapy!

American International Group was saved by an $85 billion taxpayer rescue in 2008 — and now, former AIG CEO Hank Greenberg, the largest single investor in AIG, is bringing a lawsuit against the U.S. government over this bailout.

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What will this lawsuit expose? Was the government too aggressive? Certainly the conversation about how Goldman Sachs was treated will be one of the highlights — if not the ONLY highlight that will drive the conversation. It was the very risky mortgage securities that Goldman (and the other banks) created and AIG insured that makes this all the more interesting. Most of the other banks either went belly up or were saved via a "shotgun wedding" — but Greenberg's position is that if the government held the fire to Lloyd Blankfein's feet, then the terms for the AIG bailout would not have been as onerous on the company or its shareholders — and for the U.S. taxpayer.

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Goldman (nor any of the others), as we all remember, was not required to take a single cent of a haircut on their portfolio — causing so many to suggest it was just another "backdoor bailout" for Goldman Sachs. Where were the hardball tactics taken with Bear Sterns, Merrill Lynch, Bank of America, Wells Fargo, Washington Mutual, or Lehman Brothers? The conspiracy theory story is that Hank Paulson, the Treasury Secretary at the time, was the former CEO of Goldman Sachs and thus had a great majority of his wealth tied up in their stock and so needed to save her.

A failed bailout for AIG would have certainly negatively impacted the global financial system — a system that was already on the brink of collapse. And a failed bailout for AIG would have negatively impacted Goldman and their shareholders (Paulson at the top of that list) more than the financial crisis already had. The anger and rage that existed at the time is sure to be resurrected as the trial gets under way.

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It is hard to say what would have or could happened if we left them to fail, but it is not difficult to remember that the tsunami that was building around the world in the global capital markets continued to wipe out so many people. During the crisis, we saw the equity markets take the brunt as all those other markets froze — not allowing for pricing, or even trading. No one had a clue on value, yet it was easy to see value on regulated listed securities. It was easy to hit the "sell" button and that is what happened.

Even after the AIG bailout, global equity markets got crushed as the bailout only raised fears of financial Armageddon and created more anger at all of the players.

This trial is sure to be therapeutic for so many. The underlying resentment needs to be cleansed and a big public caning might just help that resentment go away. In the end, the markets have recovered and AIG is once again a stand-alone company. With a market capitalization of around $77 billion today, that's a far cry from what it was worth in September 2009. The U.S. taxpayer has been fully repaid — (and not at a loss like General Motors).

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As an institutional broker who lived it and was in the trenches here at the NYSE while it was happening, I often wonder where we would be if the Treasury and the Federal Reserve did not step in to take control. The cost of doing nothing would have had much more dire consequences for us and the global economy. The system had been allowed to morph into the mass of unregulated crap that we call CDO's, CDS's, ABS's etc and because these derivatives were entirely unregulated and did not trade on any PUBLIC exchange — only allowed the originators to hide the inherent vulnerabilities. The fact that so many of the creators, the big investment banks, along with the ratings agencies had no idea, not a clue, of how these products would react in a real bearish environment vs. a test environment, speaks to the arrogance of these banks, the lobbyists who lobbied hard to keep them unregulated and our elected officials who did not understand their complexity.

Regulators, elected officials, the ratings agencies, and former Federal Reserve Chairman Alan Greenspan should all be held accountable for putting the country, U.S. taxpayers and then-Treasury Secretary Paulson in that position. That being said, I look forward to the coming trial and hope that the verdict will finally bring closure to that still gaping wound.

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Commentary by Kenny Polcari, director of NYSE floor operations at O'Neil Securities. He is also a CNBC contributor, often appearing on "Power Lunch." Follow Kenny on Twitter @kennypolcari and visit him at kennypolcari.com.

Disclosure: The author does not own shares of AIG, Goldman Sachs or any other company mentioned in this article. The market commentary is the opinion of the author and is based on decades of industry and market experience; however no guarantee is made or implied with respect to these opinions. This commentary is not nor is it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment. The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of O'Neil Securities or its affiliates.