The 16 Players To Blame For The AIG Fiasco

Thomas Baxter

Tomorrow, Tim Geithner will appear before the House Oversight Committee to answer for the actions of the New York Fed when it bailed out AIG in 2008.

The story involves everyone from administration officials to long gone CEOs.

To get you prepped we’ve listed the principals in the matter who will be most under pressure in testimony for their wrong or non-doings around the AIG debacle.

Now meet the players >

Who: Federal Reserve Board General Counsel Scott Alvarez

What Was His Role: Scott Alvarez was instrumental in allowing AIG to pay out to foreign banks 100 per cent of the $62.1 billion AIG could have potentially owed to counter parties. In particular, Alvarez went along with French regulators' position that AIG had to pay in full or break French laws.

These deals included payouts to French banks Soc Gen and BNP Paribas, which were made without concessions by the banks.

Who: New York Fed General Counsel Thomas Baxter Jr.

What Was His Role: Baxter helped to keep the details of the AIG bailout under wraps from congress and the public in the midst of the crisis.

By keeping these files hidden, the public and congress had no idea that AIG was paying one hundred cents on the dollar to its counter parties, like Goldman Sachs, by using government funds.

Photo courtesy New York Fed website

Who: Head Of New York Fed's AIG Operations Sarah Dahlgren

What Was Her Role: Dahlgren was involved in the PR strategy for the Fed during its bailout of AIG and aimed to keep as much information secret as possible. Opposed to transparency and upset over the government push for more openness, Dahlgren did everything she could to shield the counter parties of bailed out AIG from ever becoming public.

In a stinging set of e-mails now made public, Dahlgren maps out how people will be upset when they know that money went to foreign companies, and dismisses this discontent.

Photo courtesy Duke Public Policy News

Who: Director Of Financial Institutions In The Credit Risk Management Department Of AIG Barbara-Ann Livanou

What Was Her Role: Barbara-Ann Livanou was in charge of assessing risks on many of the securities, including the infamous credit default swaps, which contributed to the birth and spread of the financial crisis.

Livanou specifically looked after the risks banks, such as Lehman Brothers and Bear Sterns, brought onto the books at AIG. As of March 2009, she was still employed for the firm in the same role.

Who: Chief Credit Officer And Chairman Of The Risk Management Committee At AIG Kevin McGinn

What Was His Role: Continues to assess risk for AIG even after shepherding the company to bankruptcy, Kevin McGinn remains chairman of a committee at the centre of the financial crisis.

Claims that the process of risk assessment, particularly on super senior debt which was at the core of the financial crisis, was effectively examined by himself and his staff.

Who: Chief Executive Of AIG Investments Win Neuger

What Was His Role: Win Neuger was in charge of all of AIG's financial investments during the crisis, which included the toxic assets which burdened the balance sheet and forced the hand of the government to intervene. His internal blog at AIG, NeugerNotes, from which he commanded his team was notable for its doubts about the legitimacy of the crisis.

At one point, Neuger's team had $70 billion invested in sub prime securities.

Photo courtesy AIGinvestments.com

Who: Head Of AIG Financial Products Joseph Cassano

What Was His Role: Head of the division at the heart of AIG's collapse, Cassano made billions of dollars in bets on credit default swaps and sub prime securities which eventually brought AIG to its knees. He hid details of the financial products team from the in house regulators that may have had a chance to halt their activities.

In the midst of the company's collapse, Cassano walked away with $315 million in cash and bonuses while the company was in flames.

Photo courtesy ThisisLondon.com

Who: Head Of AIG's Financial Services Division William Dooley

What Was His Role: Replaced Joseph Cassano in 2008 after losses mounted, but was still a key member of the financial services division prior to that date. As a member on the financial services team, Dooley had a key role in the decision making behind the acquisition of credit default swaps which eventually went bust and contributed to a $5.3 billion quarterly loss at the height of the financial crisis. Dooley left the firm before the end of 2008.

Who: Head Of Enterprise Risk Management Unit At AIG Bob Lewis

What Was His Role: In charge of handling risk at AIG, Bob Lewis failed miserably to manage the firm's positions effectively, contributing to its eventual collapse.

An insider at the firm spoke out about his rampant narcissism and lack of knowledge of how AIG actually functioned.

Who: CEO Of AIG Robert Benmosche

What Was His Role: Full of complaint after the AIG bailout for the government's increased interaction with the firm, Benmosche became a symbol of CEO arrogance in a time of international crisis.

Upset over the firm's inability to compete in the marketplace, Benmosche's greatest anger was triggered when he found out the government would be overseeing how much he got paid.

Who: Former CEO Of AIG Ed Liddy

What Was His Role: Liddy was mired in scandal before it was publicly noted that he had $3 million of Goldman Sachs stock in his back pocket, and that fact only served to exacerbate a difficult situation for the CEO.

Immediately, questions were raised over Goldman's par payout on AIG CDS and their ability to maintain a healthy stock price while Liddy was in charge.

Who: Former CEO Of AIG Robert Willumstad

What Was His Role: Willumstad only served as CEO of AIG for three months and was unable to halt the falling colossus' fall. While he was offered a $22 million severance package when replaced, Willumstad refused singling himself out as one of the good guys in a period of villainy.

Who: Former CEO Of AIG Hank Greenberg

What Was His Role: Greenberg was CEO of AIG up until 2005 when a campaign by then New York Attorney General Eliot Spitzer to have him removed under suspicion of fraud succeeded.

Greenberg later sued AIG for losses connected to the collapse of his stock portfolio as a result of mismanagement. He also claimed that then CEO Ed Liddy was not of the mental fortitude necessary for his job.

Who: Former New York Governor Eliot Spitzer

What Was His Role: Eliot Spitzer successfully had CEO of AIG Greenberg fired perhaps taking the only knowledgeable person at the firm away from management of its debt books and hedging activity.

He is now at the centre of the commentary swirl pushing for more attention at AIG's counter parties after resigning from his Governor's position because of a prostitution scandal.

Who: Former New York Fed Governor, Now Treasury Secretary, Tim Geithner

What Was His Role: Geitner, who was New York Fed Governor at the height of the crisis, pushed to have the secrets of the AIG deal kept hidden.

Those secrets spell out the concern that if they public was to know the rate in which banks such as Goldman Sachs were being paid, public opinion would become a serious obstacle. Geitner also failed to spot the crisis before its onset, more likely a more serious failure than his transparency issues.

Who: Former Treasury Secretary Hank Paulson

What Was His Role: Arranged for his old firm Goldman Sachs to receive one hundred per cent of its payments through U.S. cash infusions into AIG.

Paulson is being called to testify because of these links to his old employer which may have influenced how he dealt with payouts during the crisis.

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