Via Memeorandum, Vanity Fair has an interesting piece on AIG's collapse. Here's a small taste:
"[T]he public explanation of A.I.G.’s failure focused on the
credit-default swaps sold by traders at A.I.G. F.P., when A.I.G.’s
problems were clearly broader. There was the mortgage-insurance unit in
North Carolina, United Guaranty, that had taken on all sorts of silly
risks in the past two years, lost several billion dollars, and replaced
their C.E.O. There were the fund managers at A.I.G., the parent
company, who had blown nearly $50 billion on trades in subprime
mortgages—that is, they had lost more than A.I.G. F.P., whose losses
stood around $45 billion.
"And there was a pattern: all of this stuff had happened since 2005, after an accounting scandal forced C.E.O. Maurice “Hank” Greenberg to resign. Greenberg, who had headed A.I.G. since 1968, was a bullying, omnipotent ruler—one of those bosses who did not so much build a company as tailor it to his character and render it incapable of being run by anyone else. After he was forced out, Greenberg said, 'The new management wanted to prove that they could continue to grow without former management” and so turned a blind eye to all sorts of risks.
"So how come most of the senior management at A.I.G. was left in place by the U.S. Treasury after the bailout? Why were officials, both public and private, so intent on leading others to believe all the losses at A.I.G. had been caused by a few dozen traders in this fringe unit in London and Connecticut?"
"And there was a pattern: all of this stuff had happened since 2005, after an accounting scandal forced C.E.O. Maurice “Hank” Greenberg to resign. Greenberg, who had headed A.I.G. since 1968, was a bullying, omnipotent ruler—one of those bosses who did not so much build a company as tailor it to his character and render it incapable of being run by anyone else. After he was forced out, Greenberg said, 'The new management wanted to prove that they could continue to grow without former management” and so turned a blind eye to all sorts of risks.
"So how come most of the senior management at A.I.G. was left in place by the U.S. Treasury after the bailout? Why were officials, both public and private, so intent on leading others to believe all the losses at A.I.G. had been caused by a few dozen traders in this fringe unit in London and Connecticut?"
See the rest of the story here.
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Posted by: LittlFairy | July 09, 2009 at 07:34 AM