My
wireless had been knocked out for several hours, so apologies for the
blackout. We are about an hour and a half into Session 3 with Goldman,
but before discussing what is going on now I’ll briefly discuss the AIG
session.

Cassano, former head of AIG’s Financial Products
division, was in charge of creating the financial instruments that
imperiled AIG. In his opening testimony he admitted that his beliefs on
the events leading up to the crisis strayed from the "popular wisdom",
and throughout the questioning this became eminently clear.

Cassano
failed to admit to a single act of wrongdoing, asserting instead that
had he not resigned he would have been able to save taxpayers $40
billion dollars by enforcing CDS contracts more competently than the
government had. "I would have negotiated a much better deal for the
taxpayers than what the taxpayers got."

(Just to give some quick
background, the government had to bail out AIG in part because the CDS
were performing so poorly that customers were demanding more and more
collateral–collateral that AIG could not come up with. Cassano here is
asserting – download his written testimony – that he could have made AIG stick to its guns and get
customers to demand less collateral… it’s still unclear how he could
have possibly done this.)

Additionally, Cassano asserts that had
the government not intervened, the bets made under his division would
make money today. This is truly shocking, since the Commission points
out that 89% of the CDS were backed by subprime mortgages.

It is
overwhelmingly clear that Cassano, disingenuously, is out to salvage
his reputation. Indeed his lawyers have put out this statement after
Session 2 ended: "Mr. Cassano wishes to thank the Financial Crisis
Inquiry Commission
and its professional staff for their fairness and objectivity. He hopes
his testimony was helpful, and also helps to correct the serious
misinformation now buried in the public discourse about AIG FP."