Wasn't Me

Interesting piece in Vanity Fair (who reads Vanity Fair?) (Michael Lewis on A.I.G.) which tries to shed some light on what was going on in AIG's Financial Products unit. It's titled "The Man Who Crashed the World" which, considering the text, seems wildly inappropriate to me. Must've been added by an editor.

The article sources Jake DeSantis. A guy you might remember from his public resignation in the Op-Ed section of the New York Times.

First, AIG is a huge company that does many fine things (like insurance) very well. Second, no one at AIG (including even those people in the Financial Products unit) is directly responsible for the financial meltdown. Nothing criminal was done there, nor anything particularly shady.

A whole bunch of people were asleep at the switch. Responsibility runs the gamut from federal regulators, state agencies, banks, auditors, credit rating agencies, and yes, insurers. Even inside AIG, it's certainly short-sighted and wrong to lay the blame at the feet of a handful of operators in one small division of a huge multinational company. However, there's a LOT of responsibility and plenty of blame to go around. Everybody's getting some.

The facts are that AIG's Financial Products division did a variety of incredibly stupid things (insured sub-prime loans) for a very very very long time (several years) with contracts containing ludicrously one-sided provisions (that eventually sunk AIG). They did this because it generated income, money for nearly nothing, and they were oblivious to the risks.

They enjoyed handsome profits (and salaries) facilitated by AIG's fine reputation. While the money rolled in, nobody really bothered to check what kind of risks they were taking. When they finally realized what they'd signed on to, they denied that the risks were really that bad. Then once they could no longer deny it, they closed their eyes and prayed they would make it through somehow. Then when all hell broke loose they shook their heads and said, "It wasn't me! It was my boss! He's a real bozo."

If the greed and callousness of the 80s earned its participants the nickname the "Me" generation, the sheer denial and finger-pointing of the 0s may well earn us the "Wasn't Me" generation.