Subprime Mortgage Crisis
Cassano sold hundreds of billions of credit protection in the form of CDSs without having to put up any real money as collateral as this form of insurance had been deregulated with the Phil Gramm-sponsored Commodity Futures Modernization Act of 2000, signed by Bill Clinton. When, in the financial crisis of 2008, investment banks requested insurance money for their collapsing derivatives, AIG was unable to deliver and received a bail-out from the taxpayers. Just one year earlier while discussing the company's CDS portfolio with analysts, he said "It is hard for us, and without being flippant, to even see a scenario within any realm of reason that would see us losing $1 in any of those transactions."
During his career at AIGFP from 1987 until he was forced to retire in March 2008, Cassano received $315 million: $280 million in cash and an additional $34 million in bonuses. An initial $1 million-a-month consulting fee was later canceled. According to Matt Taibbi:
In fact, Cassano remained on the payroll and kept collecting his monthly million through the end of September 2008, even after taxpayers had been forced to hand AIG $85 billion to patch up his mistakes. When asked in October why the company still retained Cassano at his $1 million-a-month rate despite his role in the probable downfall of Western civilization, CEO Martin Sullivan told Congress with a straight face that AIG wanted to "retain the 20-year knowledge that Mr. Cassano had." (Cassano, who is apparently hiding out in his lavish town house near Harrods in London, could not be reached for comment.)
In the wake of the scandal, United States regulators and the United Kingdom Serious Fraud Office began investigating Cassano's dealings to determine whether they were just excessive and risky, or criminal.
Other articles related to "subprime mortgage crisis, subprime, mortgage, subprime mortgage, mortgage crisis":
... In August 2007, the firm closed its subprime lender, BNC Mortgage, eliminating 1,200 positions in 23 locations, and took an after-tax charge of $25 million and a $27 million reduction in goodwill ... said that poor market conditions in the mortgage space "necessitated a substantial reduction in its resources and capacity in the subprime space" ... an unprecedented loss to the continuing subprime mortgage crisis ...
... The Subprime mortgage crisis solutions debate discusses various actions and proposals by economists, government officials, journalists, and business leaders to address ...
... During the 2007 subprime mortgage crisis, Goldman was able to profit from the collapse in subprime mortgage bonds in the summer of 2007 by short-selling subprime mortgage-backed securities ... with bearing responsibility for the firm's large profits during America's sub-prime mortgage crisis ... York, made a profit of $4 billion by "betting" on a collapse in the sub-prime market, and shorting mortgage-related securities ...
Famous quotes containing the words crisis and/or mortgage:
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