A must-read on AIG
If you want to know what happened at AIG, a new Vanity Fair article gets as deep as anyone’s been so far. The author – not surprisingly – is [Michael Lewis](http://en.wikipedia.org/wiki/Michael_Lewis_(author), the guy who wrote Liar’s Poker. He knocks this stuff out the park. The title of the article is The Man Who Crashed the World.
Here’s a link to it, but I’ll pull out a couple of sections. The man who crashed the world would be Joseph Cassano, the former head of AIG’s financial products division. He has disappeared, and it’s unlikely we’re going to hear from him what happened. But Lewis talks to people who worked for and with Cassano, and Lewis paints the picture of a tyrant, under whom the AIG financial products machine changed dramatically:
“One day he got me on the phone and was pissed off about a trade that had lost money,” said one Connecticut trader. “He said, When you lose money, it’s my f–ing money. Say it… What? Say, Joe, it’s your f–ing money. So I said, it’s your f–ing money, Joe.”
“The culture changed,” says a third. “The fear level was so high that when we had these morning meetings you presented what you did not to upset him. And if you were critical of the organization, all hell would break lose. Says a fourth, “Joe always said, this is my company. You work for my company. He’d see you with a bottle of water, and he’d come over and say, “that’s my water.”
Later on in the article, Lewis writes this:
The people still left inside AIG FP like to list just how many things had to go wrong for their business to implode…
Their list is a catalogue of mostly large, impersonal forces. But impersonal forces require people to conspire with them. Joe Cassano was a perfect man for these times – as responsible for a series of disastrous trades as a person in a big company can be. He discouraged the dissent of subordinates who understood (the trades) better than he did.
It really speaks to the little expressed truth about Wall Street’s collapse and the government’s failure to prevent it – it genuinely matters who’s behind the wheel.
Although, when Kai Ryssdal talked to Lewis earlier this week, I thought Lewis contradicted that idea bit:
There are people you could lynch and feel good about it. But the problem isn’t the bad people, the problem are the rules of the game. I think, if you want to trace it back to ground zero, there are a series of attitudes at the bottom of the crisis. A belief that whatever markets did was basically useful and good, and if you gummed them up, you were going to destroy this wealth-creating machine. Now people don’t swallow the argument that Wall Street knows what it’s doing.
I highly recommend reading the entire Lewis piece. Lewis’s involvement in the story begins with a call from Jake DeSantis. I’m sure you’ll remember him when I tell you that his resignation letter from AIG FP was printed in the New York Times. It turns out Michael Lewis was behind that happening, too.
Marketplace is on a mission.
We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.
Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?