AIG’s Sullivan says risks were not clear
BRITISH-born former AIG chief executive Martin Sullivan yesterday admitted he did not know in 2005 about the huge increase in risk the firm’s financial products unit had taken on.
A US inquiry panel investigating the financial crisis yesterday quizzed Sullivan and other former AIG bosses including Joseph Cassano, who ran AIG’s financial products arm in London, about the collapse of AIG in 2008 that ended in a government bailout in late 2008 costing $182bn. Its problems were linked to derivatives contracts of over $1 trillion.
Sullivan told the enquiry: “I only became aware of the CDS (credit default swap) portfolio in 2007. I was receiving reports, but they didn’t indicate any problems with the portfolio.”
Meanwhile, Joseph Cassano told the panel he could have saved taxpayers billions of dollars by negotiating harder with banks, including Goldman Sachs.
Cassano, who retired from AIG in March 2008, said: I would have been able to negotiate substantial discounts such that the taxpayer would not have had to accelerate the $40bn to the counterparties… I can see the counterparties were paid off at 100 cents on the dollar. I don’t know how the negotiations went.”