AIG knew of potential problems in valuing swaps: report

[UpInArms]

Source: Reuters

NEW YORK (Reuters) - Top executives at American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz) knew of potential problems in valuing derivatives contracts, known as credit default swaps, long before questions about the risky transactions caused its stock to plummet, the Wall Street Journal said, citing documents released by congressional investigators.

The problems with these swaps would have driven AIG into bankruptcy -- if not for a $123 billion federal rescue, the Wall Street Journal said Sunday in a story on its website.

A federal criminal probe is investigating how candid AIG executives were with investors at a December 2007 investor conference and whether executives at AIG's financial-products unit, which sold derivatives contracts, misled AIG's outside auditor last fall, the Journal said.

<snip>

St. Denis wrote he wasn't personally involved in the AIG unit's swaps valuation. In late September 2007, according to St. Denis's letter, the AIG unit's head, Joseph Cassano, said he had "deliberately excluded" St. Denis "because I was concerned that you would pollute the process," the WSJ said. St. Denis said in his letter he resigned on October 1, 2007. AIG's chief auditor, Michael Roemer, asked him later that month why he quit. St. Denis said he told Roemer about Cassano's comment.

"That would indicate that a key AIG executive last fall was aware of Mr. St. Denis's concerns," the Journal said.

Read more: http://www.reuters.com/article/ousiv/idUSTRE49B2WW20081012

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criminals

[bluesmail]

1. Here's to hoping it all backfires.

[Miss Chybil]

2. At least they're creating jobs

for federal prison construction contractors. They're going to need a lot more beds.

[snot]

3. no sh*t.

those creating the problems had at least an inkling, unlike the rest of us.