There's nothing "notorious" about AIG. American International Group, or AIG, is the largest property and casualty insurer in the United States. AIG is also one of the largest companies in the United States placing 10th on the Fortune 500 list of companies in 2007......I'm no AIG apologist, but this company has been in business for over 90 years and has probably done a lot of good for a lot of people during that time. If anyone is notorious, it's Joseph Cassano.*Cassano sold hundreds of billions of credit protection in the form of CDSs without having to put up any real money as collateral as this form of insurance had been deregulated with the Phil Gramm-sponsored Commodity Futures Modernization Act of 2000, signed by Bill Clinton. Political writer Matt Taibbi nicknamed him "Patient Zero of the global economic meltdown."I'm going from memory a little bit here, so some of the details might be a bit off, but the jist is...AIG sold hundreds of billions of dollars on insurance on collateralized debt obligations which in fact turned out to be virtually worthless. These losses far exceeded any reserves AIG possessed, and unchecked may have created and cascading series of worldwide banking failures.For whatever reason, AIG was unable or unwilling to adequately assess their risk of these obligations. They were insuring complex financial instruments that they did not understand. That should be extremely scary to everyone.Apparently, AIG's narrative is that one rogue trader named Joseph Cassano was the guilty party. That's even more scary. One guy, completely unchecked, had the ability to blow up the entire company, with repercussions throughout the entire global banking industry. No oversight, no nothing. How many more guys are like that are out there? Zero? Two? A dozen? Here's the crazy part: After all this, some people are willing to stake their retirements in poorly understood, complex financial instruments controlled by an international insurance company.
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