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Yoo Hoo! Yes, Mr. Cop – Over THERE! (AIG)

Karl Denninger reports on the AIG "Patient Zero" Cassano’s reckless activities and wonders who else is involved.

Yoo Hoo! Yes, Mr. Cop – Over THERE! (AIG)

Courtesy of Karl Denninger at The Market Ticker

Hmmm….. this is interesting….[The Executive Who Brought Down AIG, ABC News]

"He is the golden boy of the casino," said Rep. Speier. "They basically took peoples’ hard earned money and threw it away, gambled it and lost everything. And he must be held accountable for the fraud, for the dereliction of his duty, and for the havoc that he’s wrought on America."

Oh, I see.  There’s that nasty "F" word, and this one you can say on TV!

But let’s not be misdirected by bonus payments and "special legislation" eh?  After all, anyone who believes this guy acted alone must be smoking something….

After the huge losses became known, Cassano was fired from AIG in early 2008, but he still received a salary of $1 million a month until Congress intervened. AIG has received about a $180 billion in bailout funds so far.

Ah.  Let me see if I can grok this.  Here’s a guy who allegedly "hid" huge losses, was fired for it, but got a $1 million a month "salary" after being "fired", and he acted alone?  That’s why they paid him $1 million a month after firing him?

You expect The American People to believe that?

It gets better:

An ABC News investigation found that Cassano set up some dozens of separate companies, some off-shore, to handle the transactions, effectively keeping them off the books of AIG and out of sight of regulators in the U.S. and the United Kingdom.

"This is the other very important issue underneath the AIG scandal," said Blum. "All of these contracts were moved offshore for the express purpose of getting out from under regulation and tax evasion."

Yes, and again, there was nobody else within the firm that saw something like "Lichtenstein Subsidiary Profit, $10 billion" in the internal accounting of the company and thought that was funny? 

Anyone remember the infamous "barge transactions" from the era of ENRON?

Of course AIG’s CEO didn’t see anything wrong with this…..

Earlier this month, AIG CEO Edward Liddy told Congress Cassano had done nothing wrong.

"I’m not a lawyer but there is no evidence of wrongdoing in any of this," said Liddy.

Really Mr. Liddy?

There’s nothing wrong with moving transactions offshore through a series of shell companies to both avoid taxation and regulation, nor with having the accountant assigned to that unit intentionally kept away from the guy who’s structuring the transactions so he can’t ask "too many" questions?  You seem to imply that you knew about it, but that sort of subterfuge (if it is as reported) in a company you are operating is all ok?

I must admit that in my time as a CEO I never ran a company as large as AIG (or anything even close to it) but I did, a couple of times, find people in the company who were intentionally concealing some aspect of what they were doing from me (and by extension, the other shareholders.)

My response?  They were immediately fired and no, they didn’t continue to be paid their salary or bonus.

Oh, and what about the external auditors?  AIG has those, right?  After all, it is a public company.  Hmmmm….

Again I ask – who’s interest does Mr. Liddy represent?  Is it the taxpayer (as it should be, since this firm would not exist but for our largesse) or is it Goldman Sachs and other banking interests, given that Mr. Liddy was a director at Goldman before Hank Paulson, Goldman’s former chief, tapped him to work for a "mere" $1 salary? 

This is what the NY Daily News said back on March 17th (which unfortunately went under my radar at the time):

Company auditor Joseph St. Denis became concerned about the Financial Products unit, but Cassano barred him from checking.

St. Denis later quoted Cassano as saying, "I have deliberately excluded you … because I was concerned that you would pollute the process."

St. Denis would recall Cassano saying he did not want to be promoted even further up the corporate ladder "because it would separate [him] from the money." St. Denis would remember Cassano telling him "AIG’s corporate management was "scared to death" of him."

That’s very interesting.  What’s even more interesting is his written testimony to the House Oversight Committee:

"I have deliberately excluded you from the valuation of the Super Seniors because I was concerned that you would pollute the proces."

My belief is that the "pollution" Mr. Cassano was concerned about was the transparency I brought to AIGFP’s accounting policy process.

Ah, so Mr. St. Denis, the accountant, puts in writing (on October 4th 2008, before much in the way of funds were disbursed to AIG) claims that appear to be a "smoking gun" in regards to what has been going on within AIG (read the whole thing; it’s rather ugly) and yet somehow both Henry Paulson and Tim Geithner agree to transfer nearly $170 billion of taxpayer money to AIG to "bail it out", with full knowledge of this written testimony not only within the administration but also within the Congressional Committee on Oversight and Government Reform!

And where did this guy (Cassano) come from?

Joseph Cassano started out at Drexel Burnham Lambert under Michael Milken, "the Junk Bond King." Drexel imploded in 1990 and Milken landed in prison.

AIG promptly hired a team of Drexel people to start a Financial Products unit, Cassano among them. Cassano became the head and began dealing in securities known as "credit default swaps" out of one office in Wilton, Conn., and another in England, dubbed "the London casino."

You can’t be serious?  Drexel? 

How does this sort of thing "fly under the radar" in Washington DC?  Why you just make some "campaign contributions" to Chris Dodd and Barack Obama, the latter of whom wins the election and then allows yet another slug of money to be funneled through your former "employer" to hide the bad bets you made that now are being paid down to foreign banks?

Nor does this appear to be "just him" giving those "donations" either:

In March 2009 Cassano was linked to e-mails he authored in 2006 which solicited contributions from AIG executives for Dodd’s campaign due to Dodd’s position as incoming chairman of the Senate Banking Committee.

Oh Mr. Cop!  Mr. Cop!  Mr. ERIC HOLDER!

One has to wonder – is the reason that Mr. Eric Holder, United States Attorney General, is not after this is due to campaign contributions made to his boss?

Has Barack Obama told his employee Eric Holder not to go after this guy?

And how about Chris Dodd?  Nothing wrong there either?

Hmmmmm.

And no, I will not be satisfied if the law just goes after Joe here.  Every single individual and firm that knew of this and did nothing, if criminal culpability is proved (and it sure looks like this "business" was intentionally structured in an attempt to avoid regulatory oversight and perhaps to unlawfully avoid paying taxes!), needs to hang from the (lawful) yardarm, including the accountants, external auditors and every single person within our government who knew and yet allowed the Treasury to be looted to pay off these "bad bets", including Henry Paulson, Tim Geithner and the entire Federal Reserve Board who approved the AIG transactions with The Fed.

Anyone remember Arthur Anderson?

PS: Mr. Cassano is alleged to have very extensive property holdings in The United States as well as having been paid some $300 million dollars over the last few years.  Can we find a cop interested in serving up clawbacks and forfeiture actions for lunch?


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