Outrageous But Legal: AIG Scam Mastermind Joseph Cassano Avoids DOJ Charges
Courtesy of Damien Hoffman
Although we are getting closer to the handcuff phase of the economic crisis, the US Department of Justice does not have the authority to bring charges against AIG (NYSE: AIG) or uncollateralized credit default swap mastermind Joseph Cassano. This is another classic case of the criminals being 10 steps ahead of the police.
Also, this raises a much more important issue: when extremely harmful or completely unethical behavior is exceptionally creative or cutting edge, it may not yet be deemed illegal.
So, in this case, there were $1,000 an hour lawyers toiling more than 24 hours a day to abet destructive behavior. This is completely identical to the nifty off balance sheet scams engineered by Enron. As we speak, armies of the brightest legal minds are pouring over the new Financial Regulation Bills in order to help another savvy client do the same.
When will we preempt this game of smart cat and slow mouse? When we establish a set of core principals in finance which establish an ethical playing field. I discussed this in depth on Fox Business on Friday night, and I will be publishing my full proposal in the weeks to come.
Unfortunately, until we transform the Wild West of Wall Street into a productive gridiron, the next financially engineered scam is inevitable. And until we arrest and punish CEOs like Lehman Brother’s Dick Fuld, corporate executives will continue using the ridiculous excuse that they somehow deserve all the credit when their strategy is successful yet somehow had no idea what was happening when their strategy screwed others. Goldman Sachs (NYSE: GS) and Citigroup (NYSE: C) are also particularly adept at this PR game.
Yesterday, Joseph Cassano’s attorney, F. Joseph Warin, said ”[T]he results are wholly appropriate in light of our client’s factual innocence.” This is public relations speak for: “Since you suckers did not have a law prohibiting my client’s destructive behavior, he was appropriately allowed to escape punishment by your incompetent law makers and executives.”
Outrageous, but legal.
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