E-mails inside AIG reveal executives struggling with growing crisis

Source: WaPo

The probing e-mails came from every direction inside insurance giant American International Group during the summer and fall of 2007, all with the same underlying question:

Could Joe Cassano back up his assurances -- to auditors, rating companies, colleagues and shareholders -- that his Financial Products unit wasn't in trouble?

Cassano grew weary at times of the seemingly endless inquiries, even as he set about answering them. He was particularly impatient with the repeated requests from Elias Habayeb, an AIG executive at the parent company's headquarters who appeared unsatisfied with Cassano's assertions that the sinking subprime mortgage market posed no long-term risk to the firm.

"More love notes from Elias," Cassano wrote to his subordinates as he forwarded another set of Habayeb questions. "Please go through the same drill of drafting answers . . ."

The Cassano-Habayeb correspondence, along with thousands of other e-mails obtained by The Washington Post, as well as supporting interviews, reveal a company wracked by more division, doubt and turmoil than anyone on the outside realized during those tense months in 2007, a full year before the federal government undertook one of the largest corporate bailouts in U.S. history to prevent AIG's collapse.

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2009/12/29/AR2009122903322.html?hpid%3Dtopnews&sub=AR

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A long but worthwhile read. Interesting quote:

In early August, a colleague e-mailed a wire story based on a Wall Street Journal article, headlined, "AIG Might Be Deceiving Itself on Derivatives Risks, WSJ Says." Cassano replied: "Hopefully people just ignore it. It is a real non story."

in, and we still don't own all of it, and they still don't know what they're doing, but they are paying themselves bonuses.

Nice work. Somehow I got on the sucker train years ago, and I have to work for a living and throw my money at game playing suits.

Exactly things like this that made me become an atheist. No just universe could operate like this.

I read the article. At least some people had it in their head that these credit default swaps on subprime mortgages were not that great an idea. But I am willing to bet they didn't think so when they first started selling the blasted things. It was all a house of cards, destined to collapse at some point. Where do these people, supposedly with MBAs and master's degrees in finance, get the idea that these "bubbles" will never pop and just keeping inflating? A few cards were removed and the whole house started to collapse.

Just what we need, bailing out the "best and brightest" for being stupid.