Joseph Cassano
Encyclopedia
Joseph J. "Joe" Cassano is an American
insurance
executive who was an officer at AIG Financial Products
from the division's founding in 1987 until his resignation in February 2008. Cassano is considered a key figure in the Global financial crisis of 2008–2009. Political writer Matt Taibbi
nicknamed him "Patient Zero of the global economic meltdown."
. In 1994, Thomas R. Savage
appointed Cassano as head of the Transaction Development Group. Cassano accepted the 1998 proposal by J.P. Morgan to package credit-default swaps on Broad Index Secured Trust Offering (nicknamed Bistros). Cassano considered these collateralized debt obligation
s a key event: "It was a watershed event in 1998 when J.P. Morgan came to us, who were somebody we worked with a great deal, and asked us to participate."
-sponsored Commodity Futures Modernization Act of 2000
, signed by Bill Clinton. When, in the financial crisis of 2008, investment banks requested insurance money for their collapsing derivatives, AIG was unable to deliver and received a bail-out from the taxpayers.
During his career at AIGFP from 1987 until he was forced to retire in March 2008, Cassano received $315 million: $280 million in cash and an additional $34 million in bonuses. An initial $1 million-a-month consulting fee was later canceled. According to Matt Taibbi
:
In the wake of the scandal, United States regulators and the United Kingdom Serious Fraud Office began investigating Cassano's dealings to determine whether they were just excessive and risky, or criminal.
and the Republican Representative Nancy L. Johnson
In March 2009 Cassano was linked to e-mails he authored in 2006 which solicited contributions from AIG executives for Dodd's campaign due to Dodd's position as incoming chairman of the Senate Banking Committee.
degree from Brooklyn College
in 1977. He worked at investment bank Drexel Burnham Lambert
during their junk bond phase.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
executive who was an officer at AIG Financial Products
AIG Financial Products
AIG Financial Products Corporation. is a subsidiary of the American International Group, headquartered in Fairfield, CT, with major operations in London, it is currently in the process of winding down all of its operations. The collapse of AIG Financial Products is considered to have played a...
from the division's founding in 1987 until his resignation in February 2008. Cassano is considered a key figure in the Global financial crisis of 2008–2009. Political writer Matt Taibbi
Matt Taibbi
Matthew C. "Matt" Taibbi is an American author and journalist reporting on politics, media, finance, and sports for Rolling Stone and Men's Journal, often in a polemical style. He has also edited and written for The eXile, the New York Press, and The Beast.- Early years :Taibbi grew up in the...
nicknamed him "Patient Zero of the global economic meltdown."
Work at AIG
In 1987, AIG hired Cassano as one of the first ten people in the Financial Products unit, as Chief Financial OfficerChief financial officer
The chief financial officer or Chief financial and operating officer is a corporate officer primarily responsible for managing the financial risks of the corporation. This officer is also responsible for financial planning and record-keeping, as well as financial reporting to higher management...
. In 1994, Thomas R. Savage
Thomas R. Savage
Thomas R. "Tom" Savage is an American insurance executive who was chief executive officer of American International Group Financial Products from 1994 until his retirement in 2001. AIGFP is considered a key company in the Global financial crisis of 2008–2009.-Life and career:Savage earned his...
appointed Cassano as head of the Transaction Development Group. Cassano accepted the 1998 proposal by J.P. Morgan to package credit-default swaps on Broad Index Secured Trust Offering (nicknamed Bistros). Cassano considered these collateralized debt obligation
Collateralized debt obligation
Collateralized debt obligations are a type of structured asset-backed security with multiple "tranches" that are issued by special purpose entities and collateralized by debt obligations including bonds and loans. Each tranche offers a varying degree of risk and return so as to meet investor demand...
s a key event: "It was a watershed event in 1998 when J.P. Morgan came to us, who were somebody we worked with a great deal, and asked us to participate."
Subprime mortgage crisis
Cassano sold hundreds of billions of credit protection in the form of CDSs without having to put up any real money as collateral as this form of insurance had been deregulated with the Phil GrammPhil Gramm
William Philip "Phil" Gramm is an American economist and politician, who has served as a Democratic Congressman , a Republican Congressman and a Republican Senator from Texas...
-sponsored Commodity Futures Modernization Act of 2000
Commodity Futures Modernization Act of 2000
The Commodity Futures Modernization Act of 2000 is United States federal legislation that officially ensured the deregulation of financial products known as over-the-counter derivatives. It was signed into law on December 21, 2000 by President Bill Clinton...
, signed by Bill Clinton. When, in the financial crisis of 2008, investment banks requested insurance money for their collapsing derivatives, AIG was unable to deliver and received a bail-out from the taxpayers.
During his career at AIGFP from 1987 until he was forced to retire in March 2008, Cassano received $315 million: $280 million in cash and an additional $34 million in bonuses. An initial $1 million-a-month consulting fee was later canceled. According to Matt Taibbi
Matt Taibbi
Matthew C. "Matt" Taibbi is an American author and journalist reporting on politics, media, finance, and sports for Rolling Stone and Men's Journal, often in a polemical style. He has also edited and written for The eXile, the New York Press, and The Beast.- Early years :Taibbi grew up in the...
:
In fact, Cassano remained on the payroll and kept collecting his monthly million through the end of September 2008, even after taxpayers had been forced to hand AIG $85 billion to patch up his mistakes. When asked in October why the company still retained Cassano at his $1 million-a-month rate despite his role in the probable downfall of Western civilization, CEO Martin SullivanMartin J. SullivanMartin J. Sullivan, OBE, , is the Deputy Chairman of Willis Group Holdings plc and Chairman and CEO of its, Willis Global Solutions, which oversees brokerage and risk management advisory services for Willis’s multinational and global accounts...
told Congress with a straight faceStraight face testThe straight face test is a test of whether or not something is legitimate or serious based on whether or not a given statement can be made sincerely, without any compulsion to laugh. The phrase goes back to about 1987....
that AIG wanted to "retain the 20-year knowledge that Mr. Cassano had." (Cassano, who is apparently hiding out in his lavish town house near HarrodsHarrodsHarrods is an upmarket department store located in Brompton Road in Brompton, in the Royal Borough of Kensington and Chelsea, London. The Harrods brand also applies to other enterprises undertaken by the Harrods group of companies including Harrods Bank, Harrods Estates, Harrods Aviation and Air...
in LondonLondonLondon is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
, could not be reached for comment.)
In the wake of the scandal, United States regulators and the United Kingdom Serious Fraud Office began investigating Cassano's dealings to determine whether they were just excessive and risky, or criminal.
Political contributions
Cassano was a political contributor to the campaigns of Chris Dodd, Barack ObamaBarack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...
and the Republican Representative Nancy L. Johnson
In March 2009 Cassano was linked to e-mails he authored in 2006 which solicited contributions from AIG executives for Dodd's campaign due to Dodd's position as incoming chairman of the Senate Banking Committee.
Early life
Cassano grew up in Brooklyn, New York, where his father was a policeman. He earned a political sciencePolitical science
Political Science is a social science discipline concerned with the study of the state, government and politics. Aristotle defined it as the study of the state. It deals extensively with the theory and practice of politics, and the analysis of political systems and political behavior...
degree from Brooklyn College
Brooklyn College
Brooklyn College is a senior college of the City University of New York, located in Brooklyn, New York, United States.Established in 1930 by the New York City Board of Higher Education, the College had its beginnings as the Downtown Brooklyn branches of Hunter College and the City College of New...
in 1977. He worked at investment bank Drexel Burnham Lambert
Drexel Burnham Lambert
Drexel Burnham Lambert was a major Wall Street investment banking firm, which first rose to prominence and then was forced into bankruptcy in February 1990 by its involvement in illegal activities in the junk bond market, driven by Drexel employee Michael Milken. At its height, it was the...
during their junk bond phase.
External links
- Joseph Cassano's Involuntary Profile, LittleSis
- Joseph Cassano Retirement from AIG Agreement
- The Big Takeover, Matt Taibbi, Rolling Stone, March 19, 2009
- The Man Who Crashed the World, Michael Lewis, Vanity Fair, August 2009