WHY AIG WILL BE OFF THE HOOK; THE CNN ANALYSIS
CNN's financial reporter David Goldman (What's in a Name?) analyzed the AIG case today. AIG lost its clients and itself billions of dollars in financial transactions called credit default swaps. Often in situations in ...which the large insurer acted as final counterparty of transactions like the Goldman collateralized debt obligations (CDO's) that we reported on a few days ago. With the Goldman Abacus CDO leading to prosecution by the US government and fraud charges, many market participants (pension plans, banks, private investors and their representatives) are either looking for a legal case themselves or carefully monitoring how the SEC and the US District Attorney will do in the Goldman case.
With AIG - at that time in September 2008 the world's largest insurer - ending up in a bailout worth USD 182 billion(!) it was clear that people would also carefully follow how prosecutors would fare in a case against AIG and its former derivatives chief Joseph Cassano. The CNN analysis concludes that it will be very difficult to successfully prosecute AIG. And that is kind of shocking in a case where one firm receives bailout money larger than the GDP of approximately 75 percent of the world's countries! One firm being saved with funding equal to what populations of complete nations - with the exception of the top 50 - were earning collectively per annum.
Joe Cassano: AIG's former derivate chief
Negative role model of the financial wiz kid during the Credit Crisis