Feds decide against charges for AIG exec

Department
of Justice prosecutors have been looking into charges against Joseph Cassano,
the insurer’s former chief executive of the Financial Products unit.

But
according to several published reports on Saturday, authorities will not go
forward with a case.

The
Financial Products unit run by Cassano handled credit-default swaps that led to
the company’s bailout by the federal government. The bailout totaled $180
billion, and much of that money is not expected to be repaid.

Cassano
led the unit of AIG that insured hundreds of billions in securities backed by other
financial institutions. When the mortgage crisis erupted and those
mortgage-backed securities went bust, AIG didn’t have the funds to pay off the
claims from those who held credit-default swaps with AIG.

It’s
unclear why Justice decided against going forward with a case, which would have
centered on whether Cassano and others misled investors on AIG’s financial
position.

In
a quotation provided to The New York Times and other media outlets, Cassano
attorney F. Joseph Warin said the system had worked and that no charges were
justified.

“The
large group of federal agents and prosecutors was diligent and professional
throughout the investigation, and our client is grateful that they did their
jobs by following the facts to the end. This result was the product of two
things: an innocent client and fair prosecutors and agents. The system worked,”
the statement from Warin said.

The
decision not to bring charges against Cassano is likely to come up in the Wall
Street reform debate.

The
Senate approved legislation on Thursday, but this bill must be reconciled with legislation
approved by the House.