This article, Behind Insurer’s Crisis, a Blind Eye to a Web of Risk in the NYTimes.com has a great rundown of how AIG crashed and burned. It turns out that much of the problem revolved around a unit of AIG known as AIGFP. As the article points out:
‘The insurance giant’s London unit was known as A.I.G. Financial Products, or A.I.G.F.P. It was run with almost complete autonomy, and with an iron hand, by Joseph J. Cassano, according to current and former A.I.G. employees.
A onetime executive with Drexel Burnham Lambert — the investment bank made famous in the 1980s by the junk bond king Michael R. Milken, who later pleaded guilty to six felony charges — Mr. Cassano helped start the London unit in 1987.’
What comes around goes around. No doubt some of the brains behind the subprime meltdown are already dreaming up new ways to leverage us into the next disaster.
Heck of a job, Mr. Cassano.