There is a glitch in the system. Alan Greenspan famously said after the collapse that he had "found a flaw" in his free market ideology. He added, "Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity (myself especially) are in a state of shocked disbelief."
Well now the shock has worn off. And what have we done about it? Absolutely nothing. The flaw Greenspan is referring to is what I call the Cassano loophole in the system. And apparently Greenspan has learned nothing from it because in his testimony this week, he said he did nothing wrong as the Cassanos of the world robbed us blind.
Jospeh Cassano was the head of AIG's Financial Products Unit. They are the ones that made about a trillion dollars worth of bets in credit default swaps. They lost. Except because of the Cassano loophole, they won.
When they lost the bets, their company was devastated. Completely and utterly bankrput. The failure was so large, it promised to drag down the rest of the global economy with it. This forced the government to step in and cover their losses. So far, the United States taxpayers have put in $182 billion to keep AIG afloat.
So, what happened to Cassano? This was all his idea and his team that brought on this collossal collapse. Well, he was fired! Great, justice served.
Oh, did I forget to mention one thing? He received $35 million in bonuses when he was let go. Can anyone in their right mind explain that? Imagine you bankrupt your company and nearly the entire world economy with it - and they give you a $35 million bonus?
Cenk Uygur: Capitalism's Achilles Heel: The Cassano Loophole
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