Too Big to Fail [312]
“Dr. Strangelove of Derivatives”: Lynnley Browning, “AIG’s House of Cards,” Portfolio, September 28, 2008.
Warren Buffett called them weapons of mass destruction: In the past he had referred to them as “time bombs” and “financial weapons of mass destruction.” Clare Gascoigne, “A Two-Faced Form of Investment—the Culture of Derivatives,” Financial Times, May 3, 2003.
Sosin fleeing to A.I.G: Sosin signed a joint venture agreement with AIG on January 27, 1987, and shortly recruited the ten men who would join his team, which already included Drexel’s Randy Rackson and Barry Goldman as partners. See Robert O’Harrow Jr. and Brady Dennis, “The Beautiful Machine,” Washington Post, December 29, 2008.
traders got to keep some 38 percent of the profits: Ibid. AIGFP reportedly kept 38 percent of the profits, with AIG retaining 62 percent. The Washington Post noted that Greenberg later said his figure was 65 percent.
“You guys up at FP ever do anything to my Triple-A rating”: Ibid.
Greenberg’s “shadow group”: Ibid. Randall Smith, Amir Efrati, and Liam Pleven, “AIG Group Tied to Swaps Draws Focus Of Probes,” Wall Street Journal, June 13, 2008.
BISTRO and J.P. Morgan: Gillian Tett, “The Dream Machine,” Financial Times, March 24, 2006; Jesse Eisinger, “The $58 Trillion Elephant in the Room,” Portfolio, November 2008.
“How could we possibly be doing so many deals?”: Brady Dennis and Robert O’Harrow Jr., “Downgrades and Downfall,” Washington Post, December 31, 2008.
“It is hard for us, without being flippant.”: Ibid.
“does not rely on asset-backed commercial paper”: “American International Group Investor Meeting—Final,” Fair Disclosure, December 5, 2007.
In 2007 one of its biggest clients, Goldman Sachs, demanded: Serena Ng, “Goldman Confirms $6 Billion AIG Bets,” Wall Street Journal, March 21, 2009.
“It means the market’s a little screwed up”: AIG investor meeting, Fair Disclosure Wire, December 5, 2007.
“We have, from time to time, gotten collateral calls from people”: Ibid.
Greenberg’s forced resignation, Spitzer’s criminal threat: According to the Wall Street Journal, Spitzer threatened AIG’s board with criminal charges unless it dismissed Greenberg. He was forced out as chairman and CEO on March 14, 2005. Spitzer filed a civil fraud suit against the firm in May, accusing AIG of “sham transactions.” James Freeman, “Eliot Spitzer and the Decline of AIG,” Wall Street Journal, May 16, 2008; Daniel Kadlec, “Down…But Not Out,” Time, June 20, 2005.
AIG’s $500 million boost: James Bandler, “Hank’s Last Stand,” Fortune, October 13, 2008.
He immediately contacted PricewaterhouseCoopers: Theo Francis and Diya Gullapalli, “Insurance Hazard: Pricewaterhouse’s Squeeze Play,” Wall Street Journal, May 3, 2005.
consulting contract, at the rate of $1 million a month: Gretchen Morgenson, “Behind Biggest Insurer’s Crisis, a Blind Eye to a Web of Risk,” New York Times, September 28, 2008; Carrick Mollenkamp, Serena Ng, Liam Pleven, and Randall Smith, “Behind AIG’s Fall, Risk Models Failed to Pass Real-World Test,” Wall Street Journal, November 3, 2008.
a 7.8 billion loss: Liam Pleven, “AIG Posts Record Loss, As Crisis Continues Taking Toll,” Wall Street Journal, May 9, 2008.
International Lease Finance Corp. considering split: J. Lynn Lunsford and Liam Pleven, “AIG Leasing Unit Mulls Split-Up,” Wall Street Journal, May 12, 2008.
“I am as concerned as millions of other investors”: Liam Pleven and Randall Smith, “Financial Rebels With a Cause: AIG—Hank Greenberg, Who Built the Giant Insurer, Steps Up His Attack,” Wall Street Journal, May 13, 2008.
“steps that can be taken to improve”: Liam Pleven and Randall Smith, “Big Shareholders Rebel at AIG—Letter to the Board Cites Problems With Senior Management,” Wall Street Journal, June 9, 2008.
to meet with the three investors: Ibid. Francesco Guerrera and Julie MacIntosh, “AIG removes Sullivan as chief executive,” Financial Times, June 15, 2008.
The company had paid Manchester United $100 million: “Manchester United