AIG's collapse from "summary" of Too Big to Fail by Andrew Ross Sorkin
In the midst of the financial crisis, AIG found itself on the brink of collapse. The insurance giant, once considered a pillar of stability in the industry, was now facing a liquidity crisis of epic proportions. AIG's downfall was not a sudden event, but rather the result of a series of risky decisions made by the company's executives. One of the main culprits was AIG's financial products division, which had been selling credit default swaps - essentially insurance against defaults on complex financial instruments. As the housing market collapsed and mortgage-backed securities went sour, AIG was on the hook for billions of dollars in payouts to its counterparties. The company simply did not have enough cash on hand to cover these obligations. In a desperate bid to stave off ban...
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