London unit with US boss may have lost a trillion dollars
AIG’s losses may have come from a small London branch office that may have lost nearly half a trillion dollars in bad deals, US broadcaster ABC News has reported.
Britain's serious fraud office and US regulators are investigating AIG's Financial Products Group, run by an American, Joseph Cassano.
ABC said: “The disastrous deals were built up in a decade and, when the crisis hit, the man who ran the unit for the last eight years retired after making $280m for himself and leaving with a $1m-a-month consulting contract.”
The unit's small group of traders risked nearly half a trillion dollars to insure US mortgages and other debt using complex financial products called credit default swaps, according to recent congressional testimony.
"AIG financial products was the core, the hottest point of the global financial crisis," freelance investigative reporter Peter Koenig told "Good Morning America" today. "It was the epicenter."
ABC News obtained a tape of Cassano from August 2007 telling investors just how confident he was. "It is hard for us with, and without being flippant, to even see a scenario within any kind of realm of reason that would see us losing $1 in any of those transactions," Cassano bragged.
ABC said that AIG admits that Cassano's unit nearly destroyed the company.
