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Michael Lewis article on AIG Financial Products

By Anonymous

Michael Lewis has a new article in the latest Vanity Fair on AIG Financial Products. It's titled, The Man Who Crashed the World, and it's nominally about former AIGFP chief Joe Cassano, but it's really about AIGFP in general. (Cassano plays a big role in AIGFP's story, of course.) The full article isn't available on Vanity Fair's website?they only offer a limited summary?but I have a pdf version of the full article that I'm embedding below (if I can figure out how to do it).

The article is excellent?it's really Lewis at his best. The media narrative of AIG's downfall was established many months ago. And yet, incredibly, Lewis is apparently the first journalist who actually went to AIGFP's offices and interviewed their traders about what really happened. As the article notes:

Here is an amazing fact: nearly a year after perhaps the most sensational corporate collapse in the history of finance, a collapse that, without the intervention of the government, would have led to the bankruptcy of every major American financial institution, plus a lot of foreign ones, too, A.I.G.'s losses and the trades that led to them still haven't been properly explained.

The real story is much less sensational, and much more nuanced, than the accepted media narrative. Shocking, I know. Also, for what it's worth, Lewis's account is consistent with what I've heard about the AIGFP trades.

We also learn the story of Jake DeSantis's infamous resignation letter that was published on the New York Times op-ed page. Lewis calls DeSantis "incredibly brave. He stepped out alone in front of a mob and compelled it to disband, at least for the moment."

Anyway, read the whole thing.

Full post as published by Economics of Contempt on July 01, 2009 (boomark / email).