News
A Brief Interlude
August 16, 2009
In a Vanity Fair article titled "The Man Who Crashed the World," Michael Lewis (author of a number of justly celebrated books and articles on Wall Street) offers this telling paragraph:
How and why their miracle became a catastrophe, A.I.G. F.P.'s traders say, is a complicated story, but it begins simply: with a change in the way decisions were made, brought about by a change in its leadership. At the end of 2001 its second C.E.O., Tom Savage, retired, and his former deputy, Joe Cassano, was elevated. Savage is a trained mathematician who understood the models used by A.I.G. traders to price the risk they were running-and thus ensure that they were fairly paid for it. He enjoyed debates about both the models and the merits of A.I.G. F.P.'s various trades. Cassano knew a lot less math and had much less interest in debate.
While it's true, fortunately, that there are not all that many people in a position to "crash the world," I was struck that in this case it as the character of one man, a man less competent, less secure, and less willing to debate "the models and the merits" than his predecessor who, or so the traders who are willing to speak to Lewis imply, leads the world to financial catastrophe. That someone unqualified for the job both technically and temperamentally should nonetheless rise to it will surprise no one who have ever worked in an organization for any length of time. Lewis, more than most, is uniquely skilled at reminding the rest of us that we are all potentially imperiled when that happens...
- Michael DeWilde