Europe's Scariest Heatmap

[Sekhmets Daughter]

8. Rate fixing the LIBOR did not cause the credit crisis.

The very first "derivative" contract was written by someone working for JPM, in NYC. AIG Financial Products was headquartered in Fairfield, CT.

AIGFP's trading in credit derivatives led to enormous losses. These losses at AIGFP division essentially bankrupted the entire AIG operation, and forced the United States government to bail out the insurer. Under CEO Edward Liddy, the decision was made to unwind AIG Financial Product's entire book of business. Gerry Pasciucco, a vice chairman at Morgan Stanley, who was not involved with AIG FP when it made its catastrophic bets, was selected to manage the unwinding of the portfolio in October 2008, after the company had effectively failed and been taken over by the Federal Reserve.


Besides, what does the geographical location have to do with anything? JPM lost billions when a trader in the UK made a series of bad trades just last year. It is an American bank and it is responsible for what the subsidiaries do. It doesn't matter how lax the UK laws were, the bank(s) were American banks...selling derivatives whose value they didn't know and had no way of ascertaining.