The AIG report, What Really Caused the Meltdown

The commission studying the bailout of AIG reported that poor oversight and inept risk management caused the insurance giant to meltdown. Also the Federal agency that was supposed to regulate the credit default swaps (insurance) barred States from looking over AIG shoulder. If States were able to regulate they would have made AIG put aside reserves to back up the credit default swaps. With reserves set aside like normal insurance companies then when the mortgages started to fail AIG would have had money to pay the claims. According to AIG reserves were not set aside because they felt mortgages would never belly up in mass and that they would not have to ever pay claims. It just goes to show that even the biggest companies need good risk management and sound business principles. Well its all water under the bridge now. Lets hope we all learn something from this. Until next time be careful out there and know your risks. K

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