Ex-AIG FP boss would have got taxpayer a better deal
Former AIG Financial Products boss Joseph Cassano, told the Financial Crisis Inquiry Commission, that Goldman Sachs had made costly demands on the insurer during the financial crisis, The FT reports.
Cassano said AIG was surprised by the size of collateral calls made by Goldman on credit insurance – known as credit-default swaps (CDS) – the insurer wrote on subprime mortgage-related securities.
In February 2006 he “remained confident in our risk analysis for the existing deals”. “I think there would have been few, if any, realised losses on the CDS contracts had they not been unwound in the bail-out,” he said.
“As you know, a decision was taken after my departure from AIG-FP to unwind the CDS contracts due largely, so far as I can tell, to the proliferation of collateral calls.”
Goldman Sachs got too much
Reuters reports that Cassano said the 2008 taxpayer bailout of up to $182bn was too generous to customers such as Goldman Sachs.
"I think I would have negotiated a much better deal for the taxpayer than what the taxpayer got," he said.
After the bailout, AIG moved to settle claims at full value, rather than negotiate lower settlements with the likes of Goldman Sachs
Cassano said AIG would not have lost money on its CDS portfolio that included subprime mortgages. Many of the pools of loans would have performed over time, except that they were unwound in the bailout, he said.
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