Monday, August 10, 2009

The Fall of AIG

Michael Lewis provides an interesting account of how AIG ended up where they are today, in an article in Vanity Fair. He narrates the story of A.I.G FP ( Financial Products) and how the ineptitude of the division caused the american tax payers $ 182.5 Billion.

Just a quote from the article..

Read the complete article titled, The man who crashed the world, here.

"At the end of 2001 its second C.E.O., Tom Savage, retired,
and his former deputy, Joe Cassano, was elevated. Savage is a trained
mathematician who understood the models used by A.I.G. traders to price the risk
they were running—and thus ensure that they were fairly paid for it. He enjoyed
debates about both the models and the merits of A.I.G. F.P.’s various trades.
Cassano knew a lot less math and had much less interest in debate."

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