DealZone

The pizza guy will miss AIG-FP’s business

March 18, 2009

98401205_3In Wilton, Connecticut, a bucolic town an hour’s drive from Manhattan, there is nowhere for AIG’s derivatives whiz kids to run, but neither is there a need to hide.

Even as questions of who is benefiting from AIG’s billions of bailout dollars stir resentment on Wall Street, people in Wilton — where AIG Financial Products, the unit that built highly complex trading instruments that eventually gutted the insurer, is based — aren’t throwing any brickbats.

People who live in the area said they have very little interaction with the dozens of businesses based in Connecticut’s dollar-dripping “Gold Coast,” dotted with golf courses and 10,000 square-foot homes.

Even local politicians didn’t have much to say about AIG-FP. “Ordinarily, I would be happy to answer your questions, but in this case I really have no knowledge of the company other than it is there,” said John Kalamarides, the local Democratic Town Committee chairman.

Michael Tucker, a professor of finance at the nearby Fairfield University, said the university’s business school engages with hedge funds and other financial institutions (in southwestern Connecticut, they’re a dime a dozen) from time to time, but recalled interactions with AIG Financial Products as being minimal.

“I went to one of their (AIG) meetings when Larry Summers was one of the speakers last fall,” Tucker said, jokingly adding, “seems like no one was talking about it at the time.” (See update below).

Since it moved to Wilton in 2000, AIG-FP seems to have kept a low profile in the town of about 18,000, which seems eons removed from the bustle of Wall Street finance, with its gently rolling hills and colonial-style houses.

But with a median home price of about $750,000, Wilton is no stranger to wealth. Many of its residents work in trade, finance, real estate or services. Why, the town even has a triple A bond rating from Moody’s — the same rating that was once a source of great pride for AIG and helped the Wilton unit to insure so many billions worth of debt derivatives.

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The AIG unit’s low profile could be because it only employs about a hundred people. Also, the unit is located on the second floor of an office park on the southern tip of Wilton, along a corridor of strip malls and nail salons about five miles from the heart of town.

The 50 Danbury Road office complex, a 220,000 square foot space that rents at about $40 per square foot, is typically hush-hush in the manner of corporate environs, with all the trappings — tennis courts, a nice gym, inoffensive abstract paintings on the walls, artistic floral arrangements, a cafe that features pan-seared mahi-mahi, red chili-rubbed salmon and other upscale fare.

The AIG-FP employees were pretty tight-lipped when asked about the mood in their office. “I can tell you for sure, it isn’t business as usual,” said one worker. “I’ve got more important things to think about, so I must respectfully decline,” said another, when I asked him if the nervousness was palpable inside.

But one guy sure was upset at the news of AIG winding down its Wilton business. Dan Letizia, who runs Letizia’s Pizza with his brother in Norwalk, one town over, said he’s been delivering pizza to AIG-FP workers for years.

But “they’ve been ordering a lot less lately, ever since the financial mess happened,” Letizia said. “Will we go out of business because of AIG? No. But will we be affected? Yes!”

(Photo 1: A $2.5 million, 6BR home for sale in Wilton; courtesy Hastings Real Estate website. Photo 2: Reuters)

Update: Fairfield University’s Michael Tucker called me to clarify that he was not talking about attending a Larry Summers talk at AIG, but at another hedge fund. Here’s an excerpt from the recorded conversation:

Q: Does the Fairfield University business school have interactions with AIG or the financial community in terms of doing case studies or site visits or having students go over there to gets hands-on understanding of derivatives?
A: Not that I know of.
Q: What about more generally?
A: The Connecticut hedge fund organization does have meetings in Greenwich — and the university has been active in that, the school of business. I don’t know about AIG specifically, I went to one of their meetings when Larry Summers was one of the speakers last fall. Seems like no one was talking about it at the time.
Comments
5 comments so far | RSS Comments RSS

I hope the AIG boys and girls are soon delivering pizzas, but I would not trust them to make change….

Posted by john asp | Report as abusive
 

No worries….

At US$500Billion, (nope, not a typo: http://abcnews.go.com/Business/story?id= 7045889&page=1) *all* Americans will be affected by AIG’s implosion.

It’s just too bad few will get a $750,000 10,000 sq ft Colonial in Wilton or anywhere else for our troubles…..

Posted by DancesWithVols | Report as abusive
 

Please publish names of people who are getting the $126b bonus when the company posted a loss of $60b last quarter. Also the name of lawyers who are filing lawsuits to defend these people

Posted by Les naidoo | Report as abusive
 

Check out this math: This article reports that there are only 100 employees of in the AIG-FP office. Reuters reports separately (http://www.reuters.com/article/topNews/ idUSTRE52E0ZJ20090315) that the AIG-FP office is “obligated” to receive $220-million in bonuses ($165-million to be paid by today!) for fiscal year 2008. Even if we were to believe that the secretaries and assistants were meant to share in the greed pie, that would still be a staggering $2.2-million per-person bonus for these borderline criminals! It is just appalling. I am so outraged, and those AIG “whiz kids” had better be thanking their lucky stars that the other 298-million Americans who don’t live like they do haven’t gone into a complete public rage (yet) of the sort that ends at a public guillotine.

Posted by Massachusetts Mom | Report as abusive
 

That was a misquote on where Summers spoke. He spoke at a Hedge Fund Conference in Greenwich which had nothing to do with AIG specifically. I said that Summers seemed to know what he was talking about. He said nothing about AIG – they were not on the radar.

Posted by Michael Tucker | Report as abusive
 

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