They are all a bunch of damn crooks, put them all in jail and throw away the keys.

Frin Wasingtonpost.comby Derek Kravitz TAGS: AIG, Wall Street, bailout, finance

Federal investigators are looking into whether former American International Group Inc. executive Joseph J. Cassano “misled auditors and investors on subprime mortgage-related losses,” Bloomberg reports.

The U.S. Attorney’s Office for the Eastern District of New York in Brooklyn and the Justice Department are also working with the Securities and Exchange Commission in related investigations into New York-based AIG’s activities.

Auditors at PricewaterhouseCoopers LLP have been questioned about memos sent last year challenging the firm’s financial controls, Bloomberg reports. At a Dec. 5, 2007, investment meeting, Cassano told shareholders at New York’s Metropolitan Club “not to fear losses on AIG’s portfolio,” telling investors that the “losses will come back.”

At an October congressional hearing, PricewaterhouseCoopers, the company’s auditor, complained of a lack of access to Cassano and his London-based unit.

Cassano, 53, ran the company’s financial products division, which trafficked in relatively risky credit-default swaps. During congressional testimony, Rep. Jackie Speier (D-Calif.) called him “the golden boy of the casino in London.” The New York Times has noted that Cassano’s “freewheeling little 377-person unit …flourished in a climate of opulent pay, lax oversight and blind faith in financial risk models.”

But as the mortgage derivative market started to unravel, Cassano’s division began racking up losses — $11 billion by last February.

During his eight years at AIG, Cassano earned $280 million and, after leaving the company in March, was slated to receive $1 million a month as a consultant through the end of 2008, Rep. Henry A. Waxman (D-Calif.), the chairman of the House Oversight and Government Reform Committee, said at the October hearing.

Cassano’s contract was terminated the day before the hearing on AIG’s collapse. (Waxman called the government’s $123 billion bailout of AIG a “direct result” of the losses incurred by Cassano’s department.)

Cassano’s lawyer, F. Joseph Warin, has defended his client’s reputation, saying that determining values for the swaps in a rapidly changing market is complex.

He also said that Cassano has been cooperating with investigators, according to Financial Week. “He provided full and complete information to investors, his supervisors and auditors.”