Joe Cassano

  • AIGFP
  • SEC
  • DOJ
  • New York Attorney General's office
  • 2010 0722 - WSJ - A Set of Scribbled Notes Helped Scuttle AIG Probe, By Thomas Catan And Amir Efrati - [link]
  • AIG - People - FCIC Interviews - mp3s
    • Steve Benzinger - {Negative Basis - Cassano told us, we just didn't know what it meant}
    • Joe Cassano - {AIGFP was 40 Billion, Where did the rest go?,  we had the money}
  • 2009 08 - Vanity Fair - The Man Who Crashed the World, [re: Joe Cassano] by Michael Lewis - [link]
  • 2018 0702 - WSJ - ‘Man Who Crashed the World’ Turns to Philanthropy, Real Estate, by By Laurence Fletcher and Lisa Schwartz - [link]
  • So from my point of view, a failsafe mechanism built into this process that said that we did have adequate liquidity reserves, because we were able to meet the collateral calls, that in the severe scenario that you're outlining, the contracts allowed you to assert rights that would then compel the counterparty to come back to the table. - (p188)

--  Joe Cassano, AIGFP

2010 0630 - FCIC - 2008 Financial Crisis and Derivatives, Day 1, AIG Executives - [PDF-376p, VIDEO-CSPAN]

  • Yet in May, the Justice Department closed its probe without bringing charges. The Securities and Exchange Commission soon followed suit.
  • A Wall Street Journal examination of how the probe fell apart shows the tremendous complexity of the investigations stemming from the implosion of the financial system in 2007-08. Helping scuttle the probe was a set of cryptic notes scribbled by an auditor on the bottom of a spreadsheet and buried among millions of pages of documents.
  • ....
  • "While practices may have been negligent, it may not be as easy to prove they were illegal," said Ellen Brotman, a white-collar defense lawyer at Montgomery McCracken.
  • ....
  • Government investigators believed the phone calls showed that employees of Mr. Cassano's unit knew their business was failing even as they publicly assured investors their losses were manageable.
  • ...
  • "It's going to get very, very, very ugly," Mr. Forster said in one call. "We're f—ed, basically."
  • ...
  • The case boiled down to a simple question: Did Mr. Cassano deliberately hide the changes from investors and auditors? Some investigators and prosecutors thought the answer was yes.
  • ...
  • The defense team didn't know it at the time, but its efforts helped focus prosecutors' attention on an obscure set of handwritten notes in their files, found scrawled on the bottom of a printed spreadsheet.
  • Prosecutors had seen the annotations, which were made by a PwC partner at a meeting with Mr. Cassano and AIG management a week before the key December 2007 investor conference. But the strange hieroglyphs from the world of financial derivatives were hard to decipher and ambiguous enough to support several readings.
  • Some of the broken phrases that could be made out: "Cash/CDS spread differential," "need to quantify" and "could be 10 points on $75 billion."
  • Prosecutors realized the notes were disastrous to their case. Along with other documents, they could be used by the defense to support its contention that Mr. Cassano had in fact disclosed the size of the accounting adjustments to both his bosses and external auditors.
  • Other pieces of evidence, including emails in which he told superiors he would make an accounting adjustment, bolstered his defense.
  • The evidence wasn't clear-cut. According to people familiar with the matter, no one at the meeting—including the author of the handwritten notes—recalled Mr. Cassano disclosing the magnitude of the accounting adjustments he was preparing to make.
  • Still, investigators and prosecutors worried that they would have a hard time convincing a jury beyond a reasonable doubt that Mr. Cassano deliberately set out to dupe investors.
  • 2009 0517 - businessinsider.com - Was AIG Cooked Long Before Joe Cassano?, by Joe Weisenthal - [link]
  • CASSANO: I do know that there were others who were treating the business the same way we did.
  • COMMISSIONER BORN: Do you know which institutions were doing that?
  • CASSANO: The monoline insurance companies were looking at it the same way. There were--those are the ones who come to mind right now.
  • COMMISSIONER BORN: Did you ever consider putting up side-capital reserves the way, for example, a monoline insurance company would be required to do in order to back up your obligations on these contracts?
  • CASSANO: We had reserves in AIGFP against our entire book.
    • There was a program that we needed to--that we had developed between us and the credit risk management and market risk management functions in which we set aside reserves for the risk that this business took.
    • So we had a pool of reserves that was available.
    • I think, you know, one of the--when I look at this business and I try and segment what happened and what went--what caused the bailout, it doesn't appear to me to have been a credit risk issue.
      • I think it was a liquidity issue.

2010 0630 - 2008 Financial Crisis and Derivatives, Day 1, AIG Executives - [PDF-376p, VIDEO-CSPAN]