AIG'S Joseph Cassano Refuses to Play Fall Guy

If a single face can serve to symbolize an economic collapse it almost certainly belongs to Joseph Cassano.

Hidden from public view for more than two years, the former head of AIG's controversial Financial Products unit resurfaced in a big way today in Washington, D.C., testifying before a federal commission investigating the financial crisis many believe he helped create.

"It appears AIG was as forthcoming to the public as BP was about the amount of oil spilling into the Gulf," said Byron Georgiou, a member of the bi-partisan Financial Crisis Inquiry Commission.

Vilified as nothing less than "The Man Who Crashed The World," Cassano refused to play the fall guy or scapegoat on Wednesday for what he dubbed a "market disruption event."

"This was an extremely remote risk business," he said during a three-hour session. "We never diluted our underwriting standards."

Cassano, who made some $300 million before being "retiring" in February 2008, took little or no blame for the eventual $180 billion taxpayer bailout of AIG. His only regret, he said, was not sticking around and negotiating a better deal than the $40 billion in paid in collateral calls to investment partners like Goldman Sachs - at 100 cents on the dollar.

"You are saying if you had not left then taxpayers would have been in better shape?" asked Commissioner Peter Wallison.

"It has caused me to scratch my head," answered Cassano. "I think I would have negotiated a much better deal for the taxpayers."

But several members of the 10-person panel weren't buying his explanations, chastising Cassano for insuring $80 billion worth of exotic bets, primarily on sub-prime loans, with no conventional hedge or protection. Commission Chairman Phil Angelides and Vice Chairman Bill Thomas seemed stunned that the men who testified alongside Cassano - former AIG CEO Martin Sullivan and current Chief Risk Officer Robert Lewis - were oblivious to the risk.

"You had this massive exposure and you didn't know about it?" asked Angelides.

"To the best of my knowledge I never recognized that portfolio," said Sullivan.

In the end, Cassano delivered the kind of carefully-crafted performance that's helped him beat back a Justice Department fraud investigation and SEC probe in the last year. And now, perhaps, reshape his battered image.