Joseph J. "Joe" Cassano (born 12 March 1955) is an American

insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to protect ...

executive who was an officer at

AIG Financial Products AIG Financial Products Corporation (AIGFP) is a subsidiary of the American International Group, headquartered in New York, New York, with major operations in London. The collapse of AIG Financial Products, headquartered in Wilton, Connecticut, is ...

from the division's founding in 1987 until his resignation in February 2008.Morgenson, Gretchen (September 27, 2008
Behind Insurer’s Crisis, Blind Eye to a Web of Risk.
''

New York Times ''The New York Times'' (''NYT'') is an American daily newspaper based in New York City. ''The New York Times'' covers domestic, national, and international news, and publishes opinion pieces, investigative reports, and reviews. As one of ...

'' Cassano is considered a key figure in the

2008 financial crisis The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...

.Lewis, Michael (August 2009
The Man Who Crashed the World
'' Vanity Fair'' His employees characterized him as a "bully", and said that the culture of fear helped to create the downfall of AIG, as Cassano would often yell at employees who tried to warn him about the dangers of subprime bonds. AIG later suffered a $99 billion loss and got bailed out by the U.S. government. Political writer

Matt Taibbi Matthew Colin Taibbi (; born March 2, 1970) is an American author, journalist and podcaster. A former contributing editor for ''Rolling Stone'', he is the author of several books and publisher of ''Racket News'' (formerly ''TK News''). He has re ...

nicknamed him "

Patient Zero The index case or patient zero is the first documented patient in a disease epidemic within a population, or the first documented patient included in an epidemiological study. It can also refer to the first case of a condition or syndrome (not ...

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 Officer A chief financial officer (CFO) is an officer of a company or organization who is assigned the primary responsibility for making decisions for the company for projects and its finances; i.a.: financial planning, management of financial risks, ...

.Voreacos, David and Elliot Blair Smith (November 26, 2008)
Statements on AIG Probed by Prosecutors, People Say.
Bloomberg In 1994, Thomas R. Savage appointed Cassano as head of the Transaction Development Group. Cassano accepted the 1998 proposal by

J.P. Morgan JP may refer to: Arts and media * ''JP'' (album), 2001, by American singer Jesse Powell * ''Jp'' (magazine), an American Jeep magazine * '' Jönköpings-Posten'', a Swedish newspaper * Judas Priest, an English heavy metal band * ''Jurassic Pa ...

to package credit default swaps (CDS) on Broad Index Secured Trust Offering (nicknamed Bistros). Cassano considered these

collateralized debt obligation A collateralized debt obligation (CDO) is a type of structured finance, structured asset-backed security (ABS). Originally developed as instruments for the corporate debt markets, after 2002 CDOs became vehicles for refinancing Mortgage-backed se ...

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."Dennis, Brady and Robert O’Harrow Jr. (January 5, 2009). 1998–2005: AIG & the anatomy of the crash. ''

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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 Gramm William Philip Gramm (born July 8, 1942) is an American economist and politician who represented Texas in both chambers of United States Congress, Congress. Though he began his political career as a Democratic Party (United States), Democrat, Gr ...

-sponsored

Commodity Futures Modernization Act of 2000 The Commodity Futures Modernization Act of 2000 (CFMA) is a United States federal law that ensures that Over-the-counter (finance), over-the-counter (OTC) Derivative (finance), derivatives remained Financial regulation, unregulated. Commodity Ex ...

, signed by Bill Clinton. When, in the

, investment banks requested insurance money for their collapsing derivatives, AIG was unable to deliver and received a bail-out from the taxpayers. Just one year earlier while discussing the company's CDS portfolio with analysts, he said "It is hard for us, and without being flippant, to even see a scenario within any realm of reason that would see us losing $1 in any of those transactions." 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.Cassano retirement agreement
via

House Committee on Oversight and Government Reform The Committee on Oversight and Government Reform is the main investigative committee of the United States House of Representatives. The committee's broad jurisdiction and legislative authority make it one of the most influential and powerful pan ...

An initial $1 million-a-month consulting fee was later canceled.Daly, Michael (March 17th 2009)
Pin AIG woes on Brooklyn boy: Joseph Cassano walked away with $315 million while company staggered.
/ref> According to

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 Sullivan told Congress with a straight face 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
Harrods Harrods is a Listed building, Grade II listed luxury department store on Brompton Road in Knightsbridge, London, England. It was designed by C. W. Stephens for Charles Digby Harrod, and opened in 1905; it replaced the first store on the ground ...
in
London London is the Capital city, capital and List of urban areas in the United Kingdom, largest city of both England and the United Kingdom, with a population of in . London metropolitan area, Its wider metropolitan area is the largest in Wester ...
, 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.Palmer, Elizabeth (March 19, 2009)
AIG Credit Swapper Under Investigation.

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A two-year investigation by the U.S. Department of Justice ended in May 2010 with no criminal charges brought against Cassano, who was represented by lawyers Jim Walden and F. Joseph Warin of

Gibson, Dunn & Crutcher Gibson, Dunn & Crutcher LLP is an American multinational law firm headquartered in Los Angeles, California. Founded in 1890, the firm has more than 1,900 attorneys and 1,000 staff in 21 offices across the world, including North America, Europe, ...

Political contributions

Cassano was a political contributor to the campaigns of Democratic Senators

Chris Dodd Christopher John Dodd (born May 27, 1944) is an American lobbyist, lawyer, and Democratic Party (United States), Democratic Party politician who served as a United States senator from Connecticut from 1981 to 2011. Dodd is the List of United Sta ...

and

Barack Obama Barack Hussein Obama II (born August 4, 1961) is an American politician who was the 44th president of the United States from 2009 to 2017. A member of the Democratic Party, he was the first African American president in American history. O ...

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 The United States Senate Committee on Banking, Housing, and Urban Affairs (formerly the Committee on Banking and Currency), also known as the Senate Banking Committee, has jurisdiction over matters related to banks and banking, price controls, ...

Early life

Cassano grew up in

Brooklyn, New York Brooklyn is a Boroughs of New York City, borough of New York City located at the westernmost end of Long Island in the New York (state), State of New York. Formerly an independent city, the borough is coextensive with Kings County, one of twelv ...

, where his father was a

policeman A police officer (also called policeman or policewoman, cop, officer or constable) is a warranted law employee of a police force. In most countries, ''police officer'' is a generic term not specifying a particular rank. In some, the use of ...

. He earned a

political science Political science is the scientific study of politics. It is a social science dealing with systems of governance and Power (social and political), power, and the analysis of political activities, political philosophy, political thought, polit ...

degree from

Brooklyn College Brooklyn College is a public university in Brooklyn in New York City, United States. It is part of the City University of New York system and enrolls nearly 14,000 students on a campus in the Midwood and Flatbush sections of Brooklyn as of fall ...

in 1977. He worked in the back office at investment bank

Drexel Burnham Lambert Drexel Burnham Lambert Inc. was an American multinational investment bank that was forced into bankruptcy in 1990 due to its involvement in illegal activities in the junk bond market, driven by senior executive Michael Milken. At its height, i ...

during their

junk bond In finance, a high-yield bond (non-investment-grade bond, speculative-grade bond, or junk bond) is a bond that is rated below investment grade by credit rating agencies. These bonds have a higher risk of default or other adverse credit eve ...

phase.

References

External links

Joseph Cassano's Involuntary Profile, LittleSisJoseph Cassano Retirement from AIG AgreementThe Big Takeover
Matt Taibbi, Rolling Stone, March 19, 200
(no longer available online)The Man Who Crashed the World
Michael Lewis, Vanity Fair, August 2009 {{DEFAULTSORT:Cassano, Joseph Living people American businesspeople in insurance Drexel Burnham Lambert 1955 births Brooklyn College alumni Great Recession