Former AIG CEO Greenberg's comments
Former AIG CEO Maurice Greenberg appeared today before some House committee. His opening remarks can be found on YouTube and are worth a listen. In the ten minutes that he was allowed for opening, he explains what happened, why the government's structure of the AIG bailout is a disaster, and what to do about it now in order to salvage a former great company and to get the taxpayers' money back. All that in ten minutes. He primarily reads the statement but they are assuredly his words, unlike the committee chairs who opened by reading their staff's comments.
From this attentive and injured perspective, his remarks are as close to completely correct as anything you will hear. I say "injured" because what I manage contained AIG in a size that was not trivial based on the image of the company that was widely shared in the investment community, an image, and until he left a factual one, that was shaped by Greenberg.
Watch the video if it's of interest.
As an aside I must say, again, that the AIG disaster caught even some of the most experienced money managers in the world by complete surprise as a result of the CDS market with its lack of disclosure, absence of any clearinghouse, and no regulatory oversight. The only people who knew what was going on were the most professional traders that worked in this discreet corner of the derivatives markets. In an article in either Vanity Fair or Conde Nast Portfolio, can't remember which, a hedge fund manager named Steve Eisman, once knew him well enough, explained that he was introduced to the opportunities of the CDS market by one of the firms that eventually failed, presumably Bear or Lehman, and he saw it for what it was, an almost unbelievable risk/reward tradeoff in a bear market. What is most interesting in this is that Steve, a cynical market savvy guy, was not aware of what was going on in this market until a salesman alerted him, which shows how much chance those of us out here had.
And my points are --- one, this is exactly what Jon Stewart was talking about when he lashed into Jim Cramer. Cramer was a hedge fund manager, is as market smart as they come, and as networked as anyone. He had to know what was going on. He had played these games aggressively before --- two, there are professional traders who live off of the markets being a rigged game, and who will contribute as much money or influence as necessary to both Democrats and Republicans to keep the rules in their favor. Many of the major short term trading hedge funds are in fact supporters of Democrats which is why my suspicious mind has been so angry of late, fearing that the influence of the traders was preventing the Congress and the White House from taking on the need to regulate the CDS market, short selling, and rating agencies. At least today there has been some FASB move, under pressure, to address the challenge of mark to market reporting in illiquid markets(have not read the details yet) --- three, retail investors can be truly screwed by the insiders in the market and truly misled by the media hype of such programs as Mad and Fast Money. Their names are the only truth certain.
From this attentive and injured perspective, his remarks are as close to completely correct as anything you will hear. I say "injured" because what I manage contained AIG in a size that was not trivial based on the image of the company that was widely shared in the investment community, an image, and until he left a factual one, that was shaped by Greenberg.
Watch the video if it's of interest.
As an aside I must say, again, that the AIG disaster caught even some of the most experienced money managers in the world by complete surprise as a result of the CDS market with its lack of disclosure, absence of any clearinghouse, and no regulatory oversight. The only people who knew what was going on were the most professional traders that worked in this discreet corner of the derivatives markets. In an article in either Vanity Fair or Conde Nast Portfolio, can't remember which, a hedge fund manager named Steve Eisman, once knew him well enough, explained that he was introduced to the opportunities of the CDS market by one of the firms that eventually failed, presumably Bear or Lehman, and he saw it for what it was, an almost unbelievable risk/reward tradeoff in a bear market. What is most interesting in this is that Steve, a cynical market savvy guy, was not aware of what was going on in this market until a salesman alerted him, which shows how much chance those of us out here had.
And my points are --- one, this is exactly what Jon Stewart was talking about when he lashed into Jim Cramer. Cramer was a hedge fund manager, is as market smart as they come, and as networked as anyone. He had to know what was going on. He had played these games aggressively before --- two, there are professional traders who live off of the markets being a rigged game, and who will contribute as much money or influence as necessary to both Democrats and Republicans to keep the rules in their favor. Many of the major short term trading hedge funds are in fact supporters of Democrats which is why my suspicious mind has been so angry of late, fearing that the influence of the traders was preventing the Congress and the White House from taking on the need to regulate the CDS market, short selling, and rating agencies. At least today there has been some FASB move, under pressure, to address the challenge of mark to market reporting in illiquid markets(have not read the details yet) --- three, retail investors can be truly screwed by the insiders in the market and truly misled by the media hype of such programs as Mad and Fast Money. Their names are the only truth certain.
posted by John Borden at 4:14 PM
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