Vanity Fair Article on AIG Financial Products

EP readers might be interested in a new Vanity Fair article, The Man Who Crashed the World, describing from an inside view, Joseph Cassano, that evil doer head of AIGFP.

Almost a year after A.I.G.’s collapse, despite a tidal wave of outrage, there still has been no clear explanation of what toppled the insurance giant. The author decides to ask the people involved—the silent, shell-shocked traders of the A.I.G. Financial Products unit—and finds that the story may have a villain, whose reign of terror over 400 employees brought the company, the U.S. economy, and the global financial system to their knees.

Hat tip on article alert to Baseline Scenario, who also reviewed the article:

I don’t think anyone has ever argued that for some structural reason AIG was the only company that could have created the mess it did. AIG created the mess because it made stupid business decisions that other companies did not make. Other companies made other stupid decisions, but not the one to take a huge, one-sided bet, with no reserves, on the solidity of the housing sector and the entire economy.

Ultimately, I think Lewis is actually too harsh on FP. They made bad decisions, they essentially blew up all of AIG, and they required an enormous taxpayer-funded bailout to limit the collateral damage. But holding them responsible for the bad decisions at all the Wall Street investment banks seems a bit much.

So, while the article tries to narrow the entire financial meltdown to just one bad guy, readers on EP know this isn't true, it's a host of bad legislation, beyond belief fictional fiancial products, a conspiracy of elitist players and most of all, the focus on making a quick buck.

Still, an amazing story and one that also touches upon corporate culture.

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