Connecting the Swaps

In an exclusive story, the Washington Times reported today that shortly after the November 2006 elections, Joseph Cassano, then head of the AIG Financial Products Division (AIG-FP), pressured senior AIG-FP executives working in the company’s Connecticut offices to make campaign contributions to Senator Christopher J. Dodd’s failed presidential bid.

The message in the Nov. 17, 2006, e-mail from Joseph Cassano, AIG Financial Products chief executive, was unmistakable: Mr. Dodd was “next in line” to be chairman of the Senate Banking, Housing and Urban Affairs Committee, which oversees the insurance industry, and he would “have the opportunity to set the committee’s agenda on issues critical to the financial services industry.

“Given his seniority in the Senate, he will also play a key role in the Democratic Majority’s leadership,” Mr. Cassano wrote in the message, obtained by The Washington Times.

Mr. Dodd’s campaign quickly hit pay dirt, collecting more than $160,000 from employees and their spouses at the AIG Financial Products division (AIG-FP) in Wilton, Conn., in the days before he took over as the committee chairman in January 2007. Months later, the senator transferred the donations to jump-start his 2008 presidential bid, which later failed.

The full article can be found here.

Cassano’s email is not exactly subtle. It starts off as a typical solicitation letter, asking his colleagues (and their spouses) to donate the maximum contribution permitted by law. He explains that Sen. Dodd is next in line to be chairman of the Senate Banking, Housing and Urban Affairs Committee, which regulates the insurance industry to which AIG belongs and thus “will now have the opportunity as chairman to set the committee’s agenda on issues critical to the financial services industry.”

He goes on to instruct his colleagues to affix a specific campaign tracking code in the memo portion of the check. (How many other solicitation emails did Cassano have to keep track of?) And they were to provide copies of the checks to Mr. Cassano’s assistant within four days. (Was this additional insurance against his colleagues’ absent-mindedness included for Cassano’s benefit or for Sen. Dodd’s?) At some point, what initially appears to be nothing more than a friendly solicitation letter starts to resemble a shakedown.

Curiously, one of the recipients of Cassano’s email was Jake DeSantis, Executive Vice President of AIG-FP division, who recently went public with his reasons for leaving AIG in a New York Times Op-Ed Contributor piece.

My friend Luis at Boiling Frogs wrote an article last week titled “The Man Who Sold the World”, about Mr. Cassano’s involvement in AIG-FP’s massive speculation in credit default swaps that nearly bankrupted AIG and many of its banking counterparties worldwide.

Luis wrote:

Joseph Cassano was fired by AIG in February of 2008 after his unit posted an $11 billion loss, but was allowed to keep $34 million in bonuses, and was kept on as a consultant on a salary of $1 million per month. Since his firing, AIG has posted additional losses of nearly $89 billion, for total posted losses to date of nearly $100 billion. The US government has pumped $173 billion into AIG in an effort to stave off a global financial failure of indescribable proportions.

Unread legislation, slammed through without debate in a show of bipartisan recklessness, signed into law by a lame-duck President in the waning days of his tenure. Thoughtless, politically-driven financial decisions designed to garner votes. Promises of higher corporate taxation from a Socialist Presidential candidate drunk on the wine of populism and hubris. All these factors contributed to this crisis, and led to the loss of untold billions. And Joseph Cassano figured out a way to make all of that pay off in spectacular fashion.

When asked last September if he felt responsible for the AIG crisis, Joe Cassano smiled and said “I left there six months ago.”

Oh no, not me
I never lost control
You’re face to face
With The Man Who Sold The World

I’m not sure if Joseph Cassano really is “The Man Who Sold the World”, but I think Chris Dodd and his cronies in Congress may be the ones who sold out the United States.


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