How AIG Crashed The World Economy

In this video we go over the story of insurance giant AIG and its involvement in the 2008 global financial crisis. AIG sold credit default swaps to insure hundreds of billions of dollars worth of mortgage backed securities. When the housing market crashed, they didn't have enough money to make good on these liabilities. To prevent a financial collapse, the US government had to bail them out to the tune of $150 billion.

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[beatenbytheclown]

Fun fact: the landlord of Lehman Brothers European HQ in London had their rented insured by AIG. The concept of correlated counterparty risk wasn’t taken seriously prior to ‘08, everyone assumed the financial markets were invincible and company balance sheets had access to infinite liquidity.

[sunnycorax]

How bad AIG's management was portrayed in the video was really light. If you read "The Big Short" you will get a view of how poorly managed AIG-FP, the arm of AIG that dealt with the subprime market and the credit default swaps, actually was. They pulled out but far to late to avoid disaster because management couldn't handle being told they were wrong. Ego cost AIG dearly.

[erfhoy]

Yup. Remember people, just because something is worth billions of dollars and everybody and their mother beliefs fimly in it, does NOT mean that it is NOT a scam...

[KLK]

Could you imagine the guy that bought puts on this thing one afternoon. Holy shit.

[stocktawk]

The treasurer of Citadel Securities Resigned today boys

[nickl]

Moral of the story, when the problem is small it is your problem. But when the problem is big it is US government's problem. So go big or go home. The US government will pickup the tab if you can make the problem so big it isn't your problem anymore.

[edwardangelus]

400 billion on swaps, 400 billion on mortgage swaps that were sub prime and traded based only on aig's name.

[rnp]

Actually the number of sub-prime first mortgages we relatively small. The majority of the loans were for non-residents / investors. You should look into the actions of the Investment Banks and Hedge Funds seeking the largest possible profits that drove the bundling various loans and then their selling whilst the ratings agency provided triple A ratings to ensure they would be sold.

[graymars]

Thanks for it
Almost no one talk about what AIG did during this collapse.

[nateanglin]

It’s interesting that I’m now just hearing about AIG paying off it’s obligation with interest. I haven’t studied this financial crisis as much as I should have, but it’s still interesting that all I hear about is bailout, bailout, bailout (it was) but never the other result. That said, further strings should have been attached to upper level management with that financial backing.

[tsmall]

I would have been fine with the bailout if some executives had gone to jail. But there's no consequences for crashing the economy with your greed.

[gourmayo]

You make some great content. Thank you

[OneEyedLion]

It was too big to fail because AIG held the pension fund for Congress. They always knew Congress would bail them out.

[MrJking]

I was working for a large home improvement company. I was riding with my boss about 6 months before the crash. He said all these homes will be in foreclose in the next year. And he was right. We used AIG for our Less than B customers. But A year before this crash. They wanted to buy up all of our A paper. My boss Financed himself all the A Paper. But AIG was offering stupid money to buy all of our A paper. So the boss sold it to them. The next 2 years my boss finance all the work.

[Mr.Infumus]

Why don't any of these people ever go to prison? 🤦🏿😤😡🤬

[cyril_ogude]

Hmmm seems like a good short squeeze position. Let’s take AIG to the moon

[jaytang]

aig tried to be the house at the casino but forgot people cash out

[raywhitehead]

While many people Lost their homes. And millions lost value in their homes. And hundreds of thousands lost their jobs. The top administrators at AIG walked away with large amounts of money.

[ILOVEPOOL]

This is a lot more important than what most people realize. Good video!

[raywhitehead]

Here, in California, Brand New very nice homes were actually bulldozed down to the ground.