Snappy newsletters. Simple Facebook sharing. Spirited comments. Sweet features are waiting… GET THEM NOW!

Hot on Facebook

Uproar After NC State Agent 'Fixes' Girl's Lunch Preschooler has to eat chicken nuggets instead of mom's meal »

One Man to Blame at AIG

By Harry Kimball, Newser Staff

Posted Jul 7, 2009 7:31 PM CDT

(Newser) – AIG’s contribution to the world financial crisis may be bafflingly complex, but a single villain is emerging, writes Michael Lewis in Vanity Fair. Joseph Cassano was a "cartoon despot" who ran AIG's Financial Products division, now infamous for its credit-default swaps. Cassano, unfortunately, "didn’t fully understand all the calculations and (his) judgment was clouded by his insecurity." He "wanted to be one of Wall Street’s big shots," writes Lewis. "He wound up being its perfect customer."

Cassano's unit took on "the vast majority of the risk of all the subprime-mortgage bonds created in 2004 and 2005," with Cassano insisting all the while that housing prices could never tank. He could have undid much of the damage in 2006 but chose not to accept the costs of doing so. "Joe Cassano was the perfect man for these times—as responsible for a series of disastrous trades as a person in a big company can be. He discouraged the dissent of subordinates who understood them better than he did.”

[Images (2)]

[Quotes (2)]

AIG's financial products offices in Wilton, Conn. (AP Photo)

The AIG logo is shown in New York. (AP Photo)

« Prev« Prev | Next »Next » Slideshow

(Traders) believe that his crime was not mere legal fraudulence but the deeper kind: a need for subservience in others and an unwillingness to acknowledge his own weaknesses. - Michael Lewis

Financial risk had been created, out of thin air, and it begged to be either honestly accounted for or disguised. - Michael Lewis

« Prev« Prev | Next »Next » Slideshow

To report an error on this story, notify our editors.

OTHER STORIES ON OUR RADAR

AP Photo

35 Brutally Honest Reasons Men Say No to Sex (The Stir)

Which Entertainer Pulled Out of 'Inappropriate' Whitney Tribute? (NewsOne)

The French Government Wants to Tone My Vagina (Slate)

Obama Photo on Facebook Helps Catch Drug Dealer (HuffPost)

Hottest Women to Ever Appear in the SI Swimsuit Issue (Bleacher Report)

Partner Links

A snapshot of the day's best news stories.

View Larger Grid

All Today Yesterday Pick a Date

COMMENTS

Read the comment policy

Showing 3 of 3 comments

nick

Jul 8, 2009 12:39 PM CDT

So, did he get his bonus, or not?

Newser001

Jul 8, 2009 12:36 PM CDT

I don't think for a minute one person is totally responsible. But we could say the number one culprit was the SEC chair.

brawne

Jul 8, 2009 6:14 AM CDT

What a crock. AIG since its founder CV Starr cooked it up in Shanghai eighty years ago has been quite a piece of work. Spitzer was trying to get them for empty off-shore shell--like Enron--when he gave Hank Greenberg the rope to hang himself. CV Starr lent his name to Kenneth his nephew, and CVS a nice little drugstore always in trouble which is part of Caremark a bigger thing always in trouble. The road to Shanghai is weird indeed. Oh, the guy in London did insure enough sub-prime to wipe them off the map if Goldman had called in their losses, but fortunately the taxpayers stepped in and paid AIG the money to pay Goldman's policies and then paid Goldman for the same loss that they had just recovered from AIG. They think we won't figure this stuff out.

What's Popular Now on Facebook

Rick Santorum: Birth Control Is 'Not OK'

Valentine's Day Role-Playing Goes Very Wrong

Vanity Fair (Source Grid »)

Money • US

subprime mortgages • insurance • AIG • financial crisis • credit default swap • Joseph Cassano • financial products

More Newser Stories

Feds to Charge Crooked Bond Traders

Ex-Credit Suisse traders accused of bonus-boosting fraud

(NEWSER) - Looks like it's payback week: Federal prosecutors are planning to file fraud charges against four former Credit Suisse traders accused of overstating the value of mortgage securities in order to boost their bonuses, the Wall Street Journal reports. The alleged fraud happened in early 2008 as problems with complex mortgage securities threw the markets into turmoil. More»

Ex-Banker: Yeah, Collapse Was Our Fault

So why haven't homeowners been bailed out?

(NEWSER) - If you were trying to get a loan in southern Florida in 2007, bankers like James Theckston were there to help. "If you had some old bag lady walking down the street and she had a decent credit score, she got a loan," Chase's then-regional VP of Home Finance tells Nicholas Kristof. And Theckston says there's no doubt that though borrowers bear some responsibility for what Kristof describes as their "harebrained decisions," the bankers "were far more culpable," writes the New York Times columnist. More»

Ex-AIG CEO Sues US Over Bailout

They say takeover violated investors' fifth amendment rights

(NEWSER) - Former AIG CEO Hank Greenberg is suing the US government for $25 million for having the effrontery to bail out the dying insurer. Greenberg was ousted in 2005 after allegedly cooking AIG’s books to inflate its value, but still had a keen interest in the company during the bailout, because his firm, Starr International Co., was its largest shareholder. Now Greenberg’s saying that the bailout of the firm violated shareholders’ constitutional rights, the Wall Street Journal reports. More»

Feds Sue Big Banks Over Mortgages

US accuses them of dodging due diligence as crisis fallout spreads

(NEWSER) - The Federal Housing Finance Agency—the agency behind Fannie Mae and Freddy Mac—has filed suit against more than a dozen big banks for their role in the mortgage meltdown mess. The feds, seeking billions in compensation, accuse the banks of misrepresenting the quality of mortgage securities, reports the New York Times . The suit accuses institutions including Bank of America, JPMorgan Chase, Goldman Sachs, and Deutsche Bank of failing to perform proper due diligence and missing evidence that borrowers’ incomes were inflated or falsified. More»

AIG Sues Bank of America in Attempt to Recover Billions

Says it was misled about quality of mortgage-backed securities

(NEWSER) - With the Justice Department filing few criminal charges related to the financial crisis, AIG is taking action of its own: The mostly taxpayer-owned firm is preparing to sue Bank of America for allegedly misleading it about the quality of Bank of America's mortgage-backed securities—an accusation that gets to the root of the financial crisis. AIG wants to recoup more than $10 billion in losses in what might be the biggest mortgage securities lawsuit by "a single investor" in history, the New York Times reports. More»

NEWS FROM OUR PARTNERS

What is Newser?

Face it: there's too much news. At Newser, we choose the most thought-provoking and entertaining stories from hundreds of US and international sources and reduce them to a headline, picture, and two paragraphs. And we do it 24/7—you can come back morning, noon, night (and in between) for something new that matters. Read less, know more.

Learn more »

Partnering with: Slate

View Newser on the mobile website