In a series of posts last night I looked at various pieces of evidence suggesting fraud and criminal activity at AIG's Financial Products division. We're continuing to dig on that front. But for those of you doing your own sleuthing we want to be looking very closely at what happened to AIG's credit default swap portfolio over the course of 2007 -- what the people at AIGFP knew about its value, what they were telling people at AIG corporate, what they were telling shareholders and what they were telling regulators (of whom, of course, there were very few, given the prevailing regulatory structure).

To give a little more background, a mix of congressional testimony, SEC filings and news reports suggest that there were concerns and suspicions going back at least to 2005 that Joe Cassano wasn't letting AIG corporate or anyone else look at his divisions books. Remember, this is the divisions where the CDSs were written, the ones that played substantial role in triggering the global financial crisis. The auditor they installed to find out what was going on was shut out. Their accountancy, PricewaterhouseCoopers, was disturbed by what it saw and felt obliged to note what was happening in SEC filings. Employment and compensation contracts aren't the issue here. That is a distraction. Think more in terms of RICO. Let us know more about the on-going criminal probe.