Obama Hand Seen in Justice Department Ending Criminal Probe of AIG Executives

May 24, 2010 (LPAC)—Responding to news that the Justice Department has dropped its criminal probe of two AIG executives, Lyndon LaRouche commented yesterday that extraordinary pressure must have been exerted on the Attorney General for him to have taken such a step, and that it was undoubtedly Obama himself, along with sidekick Timothy Geithner, who put the screws on the DOJ.

After all, when Obama held his press conference to crow about the passage of the cloture motion on the "finance reform" May 20, he led off by saying, "Our goal is not to punish the banks...."

LPAC will be investigating this matter further.

The Justice Department probe had focussed on Joseph Cassano, the chief executive of AIG's London-based Financial Products unit, and his deputy, Andrew Forster. The case against them has now been dropped, without charges having been filed, although the Securities and Exchange Commission (SEC) could file a civil fraud lawsuit against them for securities violations.

The FBI and other government agencies had been investigating whether Cassano and his deputy knowingly misled investors about AIG's accounting losses on its credit default swaps portfolio. In December 2007, Cassano told investors that the company's obligations on its mortgage-backed securities were unlikely to produce losses. In the year that followed, AIG took write-downs of more than $40 billion on the swaps, and was forced to put up billions more in collateral to counterparties like Goldman Sachs.

The New York Federal Reserve, together with the U.S. Treasury, ultimately bailed out AIG to the tune of $180 billion.