AIG Credit Swapper Under Investigation

(CBS)  As recently as 2007, a discreet office in the heart of London made a vast fortune for insurance giant AIG.

The man who ran it, 54-year-old American Joseph Cassano, and his team at AIG Financial Products were selling a financial instrument called credit default swaps.

In simplest terms, reports CBS News correspondent Elizabeth Palmer, Cassano and AIG Financial Services sold big banks and brokerage firms insurance against their investments dropping in value.

Now he -- and those deals -- are being blamed for AIG's collapse.

"It's the credit default swap people that really, and that was a very small number of folks, very small number of trades, they're the ones that brought our company to our knees," said AIG CEO Edward Liddy in testimony to the House Financial Service Committee on Wednesday.

It was a goldmine when times were good, and it just seemed to get better. In 1999, revenues were $737 million. By 2005 they were up to $3 billion.

The average pay in the unit was more than $1 million a year per employee, and Cassano earned more than $280 million in 7 years. Even when the markets began to weaken, Palmer reports, Cassano's confidence didn't.

"It's hard for us, and, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing $1 in any of those transactions," Cassano told an analyst.

But only two months later, with the real estate market weakening, AIG announced a $352 million loss on the credit swaps, and that was only the beginning.

Suddenly the company was on the hook to pay out billions it didn't have.

Although he was forced to retire a year ago, AIG allowed Joseph Cassano to keep living in the company's luxurious London house, and apart from a multi-million dollar severance agreement, gave him a nine-month consulting contract for $1 million a month.

As rage builds over AIG's compensation packages, it's no surprise Cassano is keeping a very low profile.

Palmer recently went to the AIG mansion where Cassano stays, but he refused to be interviewed.

"I don't want to talk to anyone right now," he said.

U.S. regulators and the British Serious Fraud office are now investigating Cassano's dealings to determine whether they were just excessive and risky, or criminal.

By Elizabeth Palmer

[Gramjen]

Wow, this is disconcerting when a professional who is supposed to be helping assist customers is found to be unworthy of trust. In any profession, it can really harm the public's outlook and confidence in the services provided by similar professionals when there are cases such as these. http://www.insuranceadjustertrainingtexas.com/

[JackKingsley]

Whoa. That is hardcore. I didn't realize that simply getting a <a href="http://www.usstaffingadj.com">Texas insurance adjuster license</a> was so serious these days; maybe I should think twice about going there.

[Weliqwk]

Is it true that this guy contributed to Obama! If that is the case, who the heck in government can we trust? Paulson is in Wall Streets pocket ($700B worth). Isn't Geithner? Not to mention Senators who received millions, such as Dodd and Gramm to ensure this whole scam and AIG setup would work. Is this why the taxpayer is now going to buy up the toxic assets with private investors so that Wall street can make even more money out of this, and even more big payouts for these finanacial wizards? All at the taxpayer and main street expense.

[starleo146]

Posted by maddog0802 at 7:50 AM : Mar 20, 2009

I think you are so right. I heard about this guy before and wonder what is taking them so long to indict him and the payoff he got to go away and not work there any more can you believe how they handled this guy?

[gordon_geeko]

People who make a lot of money have a lot of power. These bank execs have been in bed with the government for decades, which is why none of them were caught before the crisis began and why very, very few are even under indictment right now. They still have lots of money to throw around, so the government is mostly huffing and puffing for the media while doing relatively little to hold them accountable. Notice how they're still getting public tax dollars to bail out their ponzi schemes?

[fundu2009]

they found a goat

[roach9703]

CDO is just another sucker product that duped millions. The down fall of the accounting profession has accelerated the proliferation of fraud to the point that even store clerks churn inventory price files on their cash registers, churn credit slips, and cash refunds with the help of their supervisors.
FRAUDLAND UBER ALLES!

[sonofsatan]

Hanging is too good for Madoff and his accomplice Joseph Cassano. How many American people are now ruined financially because of these two hoodlums? Is Sing Sing Prison still in operation?

[maddog0802]

Cassano is the ringleader of the entire global financial collapse. It will now finally all come out, wait and see. It was him, and the 'financial products' division of AIG that he headed up since the 80's or 90's? that conceived these 'credit default swaps'. It all amounted to issuing insurance to banks and mortgage companies to cover their losses in the event their loans went bad (which of course they did). The main problem? NO RESERVES!! Cassano and his crew figured out that the government didn't know this was really insurance, so they weren't required to have ANY RESERVES to back up the 'insurance' they were in effect writing. Cassano made over $278 MILLION dollars in 7 years, and then as this story says, he got $1 MILLION a MONTH (after he was forced to retire because the company started hemorroghing losses) pay as a 'consultant'. 'Consultant' for what?!?!? How to destroy the company and the world economy, while pocketing $1 million a month? If you think Congress and the American public are pissed now, just WAIT until the truth about this monster comes out!!! You aint seen nothing yet, folks!!!!

[I_am_me1953]

AIG Credit Swapper Under Investigation
_________________

Quit investigating him, he needs a "retention payment" afterall he is only making $1M a month right now and has to live in the company mansion. His cash flow is severly restricted at the present monment. Pleaswe hurry with his "retention payment".