Joe Cassano

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Joe Cassano was a founding member of AIG's financial-products unit.[1]

Cassano is a promoter of credit-default swaps (CDS) which were widefly criticised as being a cause of the "global financial crisis" of 2008.[2]

After receiving $85 billion in federal bailout money, in September 2008, 70 of AIGs top executives enjoyed a lavish, weeklong retreat at the Tuscan-inspired St. Regis Resort in Monarch Beach, California. The trip, which cost more than $400,000, featured banquets, golf outings and spa treatments.[3]

Before he was forced to retire in March 2008, Cassano received $315 million: $280 million in cash and an additional $34 million in bonuses.[4] An initial $1 million-a-month consulting fee was later canceled.[5]

“In fact, Cassano remained on the payroll and kept collecting his monthly million through the end of September 2008, even after taxpayers had been forced to hand AIG $85 billion to patch up his mistakes. When asked in October why the company still retained Cassano at his $1 million-a-month rate despite his role in the probable downfall of Western civilization, CEO Martin Sullivan told Congress with a straight face that AIG wanted to "retain the 20-year knowledge that Mr. Cassano had." (Cassano, who is apparently hiding out in his lavish town house near Harrods in London, could not be reached for comment.)” wrote Rolling Stone writer Matt Taibbi.[6]

Congressional Testimony Before Financial Crisis Inquiry Commission

On June 30, 2010, Joseph Cassano testified before the Financial Crisis Inquiry Commission, FCIC, regarding the roots of the worst financial crisis since the Great Depression. [7] As part of his work at AIG, his unit was responsible for underwriting insurance on bonds and securities based on bonds. [8] Cassano asserted during his testimony that the underlying loans on the CDOs were diversified. [9] "I did not expect actual, economic losses on the portfolio. That said, I was truthful at all times about the unrealized accounting losses and did my very best to estimate them accurately." [10] He further stated that: "During the short period of growth and then decline in our multi-sector CDO business, we never compromised our standards to enter into a transaction. Every deal had to stand up to the rigorous evaluation process." [11] Cassano also emphasized that AIG stopped voluntarily on writing deals with subprime exposure as early as February 2006. He claims: "We made this decision, despite the immediate impact on our profits, for one reason: it was the right thing to do to protect the long-term health of our business." [12]

Additionally, Cassano remarks on his surprise regarding the economic losses and CDO portfolios. He did not expect actual economic losses. [13] Cassano continued to distinguish how AIG handled issues as during a time when he worked for AIG and after he left. "Cassano, noting that the bailout occurred after he left his position as head of AIG-FP, said that his unit was able to negotiate with its counterparties as they stepped up their demands for increased collateral." [14]

"[W]e got steep reductions in the called-for amounts from all counterparties who made the largest calls," he said in his prepared remarks. "During my tenure, no counterparty declared us in breach or threatened litigation, which shows our strategy was effective. I believe this strategy was appropriate and in the best interests of the company and its shareholders." [15] The New York Times criticized Cassano's testimony: "It didn’t matter how good the underlying collateral ultimately was. Because Mr. Cassano had agreed to collateral triggers, all that mattered was what the securities did on a day-to-day basis. And he simply had not prepared the company for the possibility that they might decline — and that A.I.G. would have to pay its counterparties billions of dollars as they did." [16]

Cassano was featured in Vanity Fair as "the man who crashed the world." [17] Last year, Cassano was under investigation for fraud by the Department of Justice and also the subject of an SEC investigation. [18]

Articles and resources

Related SourceWatch articles

References

  1. ↑ Matt Taibbi, "The Big Takeover” Rolling Stone, March 19, 2009.
  2. ↑ Jonathan Prynn, “Named: The man who broke the banks” This Is Money, March 19, 2009.
  3. ↑ Rebecca Winters Keegan, "AIG's post-bailout spa retreat", Time Magazine, September 22, 2009.
  4. ↑ "Cassano Retirement Agreement", House Committee on Oversight and Government Reform, March 11, 2008.
  5. ↑ Michael Daly, http://www.nydailynews.com/money/2009/03/17/2009-03-17_pin_aig_woes_on_brooklyn_boy_joseph_cass-1.html "Pin AIG woes on Brooklyn boy: Joseph Cassano walked away with $315 million while company staggered"], NY Daily News, March 17, 2009.
  6. ↑ Matt Taibbi, "AIG and the Long Con", Rolling Stone, March 23, 2009.
  7. ↑ Joe Cassano, "Congressional Testimony, Cassano,", "FCIC," June 30, 2010.
  8. ↑ Shahien Nasiripour, "Joseph Cassano, Ex-AIG Exec, Is Unapologetic, Blames Auditors for Losses,", "Huffington Post," June 30, 2010.
  9. ↑ Joe Cassano, "Congressional Testimony, Cassano,", "FCIC," June 30, 2010.
  10. ↑ Id.
  11. ↑ Id.
  12. ↑ Id.
  13. ↑ Id.
  14. ↑ Shahien Nasiripour, "Joseph Cassano, Ex-AIG Exec, Is Unapologetic, Blames Auditors for Losses,", "Huffington Post," June 30, 2010.
  15. ↑ Shahien Nasiripour, "Joseph Cassano, Ex-AIG Exec, Is Unapologetic, Blames Auditors for Losses,", "Huffington Post," June 30, 2010.
  16. ↑ Joe Nocera,"Hearings that Aren't Just Theater,", "New York Times," July 6, 2010.
  17. ↑ Michael Lewis, "The Man who Crashed the World,", "Vanity Fair," August 2009.
  18. ↑ Armen Keteyian, "Cassano Posts,", "CBS News," June 30, 2010.

External resources

External articles

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