Scared to death of an accountant
Some fascinating material appearing from the Congressional hearings into the financial crisis.
The Lehman’s boss was pressed on why he wouldn’t take responsibility for the collapse of his bank. The former CEO of AIG blamed mark to market accounting for the giant insurer’s woes.
But a report today tops the lot. An oversight committee heard that among the many events inside AIG was a clash between Joseph Cassano, a former AIG executive, and Joseph St Denis,a former US regulator turned vice-president of accounting at the business.
St Denis resigned after several confrontations with Cassano over the topic of being excluded from the valuation of ‘super senior credit default swaps’ the very instruments underlying AIG’s rapid fall from grace.
St Denis is reported to have been told that he was excluded from the valuation because he would ‘pollute the process’ and later that AIG’s management was ‘scared to death of him’.
I can’t help feeling that’s as it should be. I also can’t help feeling that there must be a lot of fear out there right now and this is quite revealing about the reasons why.