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Sunday, May 23, 2010

Feds Decline Charges Against Westporter in A.I.G. Probe

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Federal prosecutors investigating the events leading up to the collapse of the American International Group in 2008 will not bring charges against Joseph Cassano, the Westporter who was the chief executive of the unit that insured mortgage-related securities with calamitous results, The New York Times reported today.WestportNow.com Image
Joseph Cassano: Returned to Compo Beach home last summer. File photo

The newspaper, which first reported the story on its

Web site Saturday, quoted “two people briefed on the matter.”

Cassano, a resident of Westport’s Compo Beach area since 1993, ran A.I.G’s Financial Products unit from London. He and other executives came under scrutiny by the Department of Justice after the insurer failed in September 2008.

A.I.G. had insured almost $80 billion in mortgage-related securities. Cassano resigned in late February 2008 after A.I.G. wrote down $11 billion on the insurance it had underwritten on the mortgage securities.

Investigators were examining whether Cassano misled investors when he stated in December 2007 that the company’s obligations on the mortgage securities it backed were unlikely to produce losses, the Times said.

The Federal Reserve Bank of New York and the United States Treasury rescued A.I.G. with a taxpayer backstop totaling $180 billion.

The people briefed on the decision not to bring charges spoke on condition of anonymity because they were not authorized to speak publicly on the matter, the Times said.

F. Joseph Warin, Cassano’s lawyer, said in a statement: “Although a two-year, intense investigation is tough for anyone, the results are wholly appropriate in light of our client’s factual innocence,” the newspaper reported.

Amid taxpayer anger over the rising cost of bailouts orchestrated in 2008, Cassano was portrayed as the principal architect of A.I.G.’s demise.

But as more information has emerged about Wall Street’s role in the sale of the mortgage-related securities that A.I.G. insured, the view of Cassano has become more nuanced, the Times said.

Now regulators are examining whether the Wall Street banks that sold these securities may have misled investors, it said.

Cassano returned to Westport in August 2009, a fact his Compo Beach area neighbors knew about for some time. But the move back into the Westport neighborhood by the son of a Brooklyn, N.Y. police officer only made headlines in September 2009. (See WestportNow Sept. 28, 2009)

Posted 05/23/10 at 04:11 PM

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