The folks at "This American Life" have put together another terrific radio hour on all the stuff you're reading about but still might not understand - why the commercial paper market has all but dried up, how credit default swaps work, and why they've helped trigger the meltdown. My favorite line comes from a CDS expert who was asked how such a dull business – insuring against bond losses - morphed into such a financial nightmare. He quoted the old May West line: "I used to be Snow White - but I drifted." My only quibble is that there doesn't seem to be any transcription available (even for a charge). Reporters Alex Blumberg and Adam Davidson do their best at explaining the intricacies of the credit world, but this is a very tough story to tell on radio – one that requires returning to a previous example in a previous paragraph. That said, the hour will help sort out the maze.
By the way, today’s Congressional hearing into the financial disaster turned up an incredible bit of information. Joseph Cassano, the former AIG executive who led the CDS operations out of London – and who many believe is responsible for the company’s near-bankruptcy – continues to receive $1 million a month, on top of the $280 million he received in the last eight years. From the NYT:
Even after A.I.G. reported $5 billion in losses in the final quarter of 2007, its chief executive at the time, Martin J. Sullivan, argued before a compensation committee that executives should receive performance bonuses. He received $5 million. “This unbridled greed, this callous abuse of trust of hard-working Americans’ savings is just so disgusting it is hard to put into words, and the anger level in America is coming, as it often has, at Wall Street," Representative Mark Souder, Republican of Indiana, said.