And Still More


In the post below, I referenced the statements of Joseph St. Denis, the former chief accountant at AIG Financial Products, who said that AIGFP President Joseph Cassano had barred him from efforts to value AIGFP’s credit default swap portfolio because he feared St. Denis would “pollute the process.” Remember, this is the accountant, who wants to review the books to see whether the accounting is right. And Cassano doesn’t want him looking.

It turns out the statement comes from this letter (.pdf) St. Denis provided last year to the House Committee on Oversight and Government Reform in lieu of a deposition. It’s definitely worth your time to read the letter all the way through.

Some of the discussion you probably need to be an accountant to fully absorb. But the basic outlines are clear. In June 2006, St. Denis was brought in to provide AIG corporate with a clearer window into the accounting practices at AIGFP and make sure they were operating under industry standard accounting protocols.

All was going well into the first rumblings of the credit crisis began in in 2007. At this point the valuations and the risks associated with AIGFP CDS portfolio began to move to the fore. And that basically led to a rapid deterioration of St. Denis’s relationship with Cassano.

There’s a lot that’s very suggestive in that letter about where this is likely going.

Late Update: TPM Reader XX doesn’t think it looks good for Mr. Cassano …

I read the St Denis letter.  I am no securities or derivatives expert, but I have worked on some pretty complex cases involving securities fraud and structured investment vehicles (which were miserable cases to work on, but that’s neither here nor there).  Suffice it to say that based on my experience, it sounds like Cassano has a lot to hide and a lot to be worried about.  His behavior and outbursts are consistent with the actions of people and companies that I have reviewed in the past – and those cases ended very badly for the defendants, whether monetarily or criminally.

In the unlikely event that you post any of this to the site, I would ask that you not use my initials.  Sensitive stuff, as you can imagine. 


Josh Marshall is editor and publisher of