dad49er
March 10th, 2009, 12:13 pm
AIG's Small London Office May Have Lost $500B
Feds, Brits Probe AIG's London Office on $500B Losses
Ground zero for AIG's spectacular implosion, which has soaked up more federal bailout money than any other entity, appears to have been a small London branch office that may have lost nearly half a trillion dollars in bad deals.
Losing money = $1M a month:
The disastrous deals were built up in a decade and, when the crisis hit, the man who ran the unit for the last eight years retired after making $280 million for himself and leaving with a $1 million-a-month consulting contract.
Fraud investigation:
Britain's serious fraud office and U.S. regulators are combing through the records of AIG's Financial Products Group, formerly located on the fifth floor of an office building in London's Mayfair section.
Epicenter of financial crisis:
The unit's small group of traders risked nearly half a trillion dollars to insure U.S. mortgages and other debt using complex financial products called credit default swaps, according to recent congressional testimony.
"AIG financial products was the core, the hottest point of the global financial crisis," freelance investigative reporter Peter Koenig told "Good Morning America" today. "It was the epicenter."
Lack of regulation to blame:
The group's traders "found a crack in the system that was unregulated," Koenig told "GMA."
Never saw it coming:
Joseph Cassano, an American who ran the group for eight years, declined through his lawyer to talk with ABC News. But ABC News obtained a tape of Cassano from August 2007 telling investors just how confident he was.
"It is hard for us with, 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 bragged.
Koenig said Cassano "had total confidence in his judgment. And he put no money against the fact that he might be wrong."
Placing the blame:
Sugar said that British Prime Minister Gordon Brown -- a "good friend of mine," he said -- "secretly blames the American businesses, banks that Europe looks up to."
Sugar described the American fiscal atmosphere before the crisis as "over enthusiasms in business, greed. You maxed out over there, as you say."
"You went mad, financial Disney World, slot machine in Vegas and every time you pulled a lever someone won, and it usually was a bank executive."
There is no single entity, or person responsible for the financial crisis. But a big part of the crisis is as simple as A-I-G.
http://abcnews.go.com/Business/Story?id=7045889&page=1
Feds, Brits Probe AIG's London Office on $500B Losses
Ground zero for AIG's spectacular implosion, which has soaked up more federal bailout money than any other entity, appears to have been a small London branch office that may have lost nearly half a trillion dollars in bad deals.
Losing money = $1M a month:
The disastrous deals were built up in a decade and, when the crisis hit, the man who ran the unit for the last eight years retired after making $280 million for himself and leaving with a $1 million-a-month consulting contract.
Fraud investigation:
Britain's serious fraud office and U.S. regulators are combing through the records of AIG's Financial Products Group, formerly located on the fifth floor of an office building in London's Mayfair section.
Epicenter of financial crisis:
The unit's small group of traders risked nearly half a trillion dollars to insure U.S. mortgages and other debt using complex financial products called credit default swaps, according to recent congressional testimony.
"AIG financial products was the core, the hottest point of the global financial crisis," freelance investigative reporter Peter Koenig told "Good Morning America" today. "It was the epicenter."
Lack of regulation to blame:
The group's traders "found a crack in the system that was unregulated," Koenig told "GMA."
Never saw it coming:
Joseph Cassano, an American who ran the group for eight years, declined through his lawyer to talk with ABC News. But ABC News obtained a tape of Cassano from August 2007 telling investors just how confident he was.
"It is hard for us with, 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 bragged.
Koenig said Cassano "had total confidence in his judgment. And he put no money against the fact that he might be wrong."
Placing the blame:
Sugar said that British Prime Minister Gordon Brown -- a "good friend of mine," he said -- "secretly blames the American businesses, banks that Europe looks up to."
Sugar described the American fiscal atmosphere before the crisis as "over enthusiasms in business, greed. You maxed out over there, as you say."
"You went mad, financial Disney World, slot machine in Vegas and every time you pulled a lever someone won, and it usually was a bank executive."
There is no single entity, or person responsible for the financial crisis. But a big part of the crisis is as simple as A-I-G.
http://abcnews.go.com/Business/Story?id=7045889&page=1