Quote:
Originally Posted by Levin
As I understand, AIG essentially insured the securities based on bad mortgages. That is, investors in these bum securities bought insurance from AIG to cover any losses they would suffer. And as the real estate market tanked, and the securities became worth pennies on the dollar, the losses were huge, and AIG has to cover them. They call them credit default swaps or whatever, but at bottom, didn't AIG just sell insurance to these people who wanted to cover their risk in the event of a crash in the real estate market and a wave of foreclosures? Smart investors to buy the insurance. Dumb AIG to sell it.
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IOW, the actuaries for AIG didn't do their jobs. Way to go Indy.