Nov. 26 (Bloomberg) -- In this holiday season, as we gather to give thanks with our families for all our blessings, my mind turns to thoughts of vengeance.

I don’t want it to turn there, but I can’t help it. Such feelings wouldn’t be roiling if there was a sheriff in town. Instead we have Treasury Secretary Henry Paulson, warning of a mushroom cloud if we don’t keep throwing billions of dollars at financial firms without any protection for the weak over the strong, the good over the bad.

The people who could have kept this from happening are doing just fine. The folks limping out of their offices with family photos and scraggly plants in a cardboard box are not.

We’ll never know if American International Group Inc. and Citigroup Inc. are too big to fail because the U.S. Treasury isn’t going to let them. But we do know that the executives of those firms aren’t too big to fail.

There are Jeff Skillings by the dozens who have plundered their companies and who should be out in the cold if not in prison. But they are still living large in their Manhattan penthouses and their oceanfront estates, stocked with French Impressionist art and servants, traveling by chauffeured cars and private jet.

Paulson says this is no time to point fingers, to make the bailout “punitive and difficult.” But why not? That’s exactly what it should be, or it will happen again, people will lose faith in their government, and others too big to fail will know they can be bailed out without personal consequence.

Love Those Entitlements

The automobile industry bosses came to Capitol Hill last week asking for $25 billion. They arrived by Gulfstream and got haughty when criticized, saying no one should make a big deal about it when the health of the economy is in the balance. It’s one thing for shareholders to put up with that type of thing. It’s quite another to ask the taxpayer to put up with it.

Entitlement dies hard. When one congressman asked the three chief executive officers to raise their hands if, in light of asking for government help, they were planning to fly back commercial, no hands went up. No plan has been proposed that calls for putting the corporate jets on EBay.

Let’s look at Citigroup, now the recipient of a $300 billion bailout by the Treasury. Its former CEO, Charles Prince, who left last November amid mounting losses from bad bets on subprime mortgages, was given a bonus valued at about $12 million on his way out the door on top of a stock and option package worth about $30 million.

Chump Change

That was chump change compared with the quarter-billion- dollar package offered his replacement, Vikram Pandit, according to the company’s proxy statement, $162 million of which is already in his pocket. Citi’s chief financial officer got a $14 million bonus and others in the executive suite $1 million or more as they presided over the ruin of the bank.

No one in charge has been punished. After Citi got its rescue, its stock surged. Why should anyone invested in Citigroup benefit? After a bailout, shareholders, particularly those in management, and the Saudi prince who took a flyer on those shares shouldn’t make a killing. They have given up the profit motive for welfare.

Paulson argues that the taxpayer is getting stakes in the companies they are bailing out, the comparison being Chrysler during the 1980s. That was in the days before outsized salaries, bonuses and perks, when there were hard assets to collateralize the loan and when Lee Iacocca took a $1 salary.

Stinking Investments

What the Treasury is getting now is a stake in a stinking pile of instruments no one can value much less wants to buy. That pile was built by bankers in tailored suits out of Harvard Business School who saw that if they could inflate -- and obscure -- the value of the mess, they could inflate the value of their bonuses.

Lawyers tell me the problem with my revenge fantasy is that there is no law against what’s happened. Well, there ought to be. The law is often a step behind because the private sector pays the smartest minds out of the Ivy League to burn the midnight oil thinking up new schemes to print money. The public sector pays small sums to overworked lawyers -- some of them emasculated by the no-regulation Bush administration -- to try to keep up. Guess who wins?

In this season of gratitude, let me give thanks to a state official, New York Attorney General Andrew Cuomo, who is going after the bonuses and other perks paid to former executives at AIG, an effort new CEO Edward Liddy is cooperating with.

Poster Child

AIG is the poster corporation of the unrepentant as it is now enjoying a bailout of its bailout, having burnt through the first $80 billion in little more than a month.

Even among those inclined to turn a blind eye to corporate crimes, there was disgust when AIG executives went on a corporate retreat at a California oceanfront resort, where private rooms for pets with silver water bowls filled with “Dog Perginon” go for $545 a night. Former AIG chief Maurice Greenberg is still living the high life, putting his name on a $50 million endowment at Yale, with Henry Kissinger claiming that his losing his job has been punishment enough.

There was no law specific to Enron’s crimes but Skilling is serving time in federal prison for multiple felonies. He paid millions in restitution, not to the government, but to the secretaries and clerks who were his victims.

That sounds about right. Maybe the new president will have more of a taste for justice than the current one. And let’s hope he brings a sheriff to town.

(Margaret Carlson, author of “Anyone Can Grow Up: How George Bush and I Made It to the White House” and former White House correspondent for Time magazine, is a Bloomberg News columnist. The opinions expressed are her own.)

To contact the writer of this column: Margaret Carlson in Washington at mcarlson3@bloomberg.net

Last Updated: November 26, 2008 00:05 EST