The Man Who Crashed the World (AIG)

http://www.scribd.com/doc/17017708/vf-article

by jakarta • 17 years ago

19 5 17 years ago

scribd.com

thomasmallen2• 17 years ago

Eh, why not. Pages took so long to load, so let's see if my host holds up to their unlimited bandwidth promise.

http://www.703designs.com/sites/default/files/article.pdf

Awaits threatening email.

If you read this comment after today, expect the link to be dead.

schizoidboy• 17 years ago

It would be nice to have something like antiscribd.com.

thomasmallen2• 17 years ago

Yea, Scribd was aggravating enough in this case for me to return from a half-year hiatus...I imagine the demand is strong for such a thing!

jonah• 17 years ago

Or a hypertext version:

http://www.vanityfair.com/politics/features/2009/08/aig20090...

christofd• 17 years ago

nice article (this is more or less a summary for myself to remember the highlights):

-AIG FP was created in 1987 when Howard Sosin, former Drexel Burnham, created a model on how to value and trade interest-rate swaps

-The company to make money insuring these transactions could not be a bank (which would be bound by law to hoard unreasonable amounts of collateral), but needed AAA status: thus... an insurance company

-AIG stops sub-prime mortgage insurance business in 2005 after realizing that 95% of their mortgage-related portfolio is sub-prime

-Other firms instead jump into the lucrative market after 2004/2005... Wall Street underwrites 1.6 trillion $ in sub-prime and 1.2 trillion in Alt-A mortgages from 2004-2007

-AIG is bound by contract to provide collateral in case they lose AAA rating; as such legacy business (built up until 2005) traps them into bleeding collateral in the 2008 crash on their sub-prime credit default swap business

-In result AIG runs out of capital reserves to provide collateral

-By comparison, no money is lost on their corporate credit default swap business

The Man Who Crashed the World (AIG)

Related Stories