Back in 2007, we were all living in our 8-bedroom homes paid for with adjustable rate mortgages. And AIG’s Financial Products unit was selling credit-default swaps like there was no tomorrow. Then we all woke up in our parents’ basements with no job and AIG was owned by the taxpayers. But Joseph Cassano, the former head of said Financial Products division, thinks he could have done a better job of bailing out the banking industry he helped lead to ruin.
“I think I would have negotiated a much better deal for the taxpayer,” Cassano said before the Financial Crisis Inquiry Commission in Washington, D.C., earlier today. “I would have been able to negotiate substantial discounts such that the taxpayer would not have had to accelerate the $40 billion to the counterparties.”
Meanwhile, AIG’s former CEO Martin Sullivan pleaded ignorance on what it was that Cassano’s group was doing the whole time.
“I only became aware of the CDS [credit default swap] portfolio in 2007,” said Sullivan. “I was receiving reports, but they didn’t indicate any problems with the portfolio.”
Translation: As long as it kept making AIG buttloads of cash, I didn’t really care.
Sullivan also claims to have been completely unaware that Goldman Sachs had made a request for $1.8 billion from AIG in July 2007.
“It was weeks or months later [when I became aware],” said Sullivan. “It was nowhere near around July time – I think it was much later on in the year.”
The commission’s vice-chairman Bill Thomas was curious how the CEO could be so ignorant and ill-informed about the goings on of his own company:
I will admit I’ve never been involved in an enormous multinational operation [but] there’s not much communication in what I’d have thought was a major problem in a significant sector of the business.