# What did AIG do exactly?

**URL:** <https://boards.straightdope.com/t/what-did-aig-do-exactly/490634>\
**Category:** Factual Questions\
**Created:** [March 24, 2009, 7:59pm UTC](https://boards.straightdope.com/t/what-did-aig-do-exactly/490634 "2009-03-24T19:59:13Z")\
**Posts on this page:** 3\
**Page:** 1

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**Author:** ![sweeteviljesus](https://avatars.discourse-cdn.com/v4/letter/s/898d66/32.png) [@sweeteviljesus](https://boards.straightdope.com/u/sweeteviljesus)\
**Post date:** [March 24, 2009, 7:59pm UTC](https://boards.straightdope.com/t/what-did-aig-do-exactly/490634/1 "2009-03-24T19:59:13Z")

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As I understand it, what AIG was doing was providing insurance for collateralized debt obligations which were junk without insurance but with insurance became investment-grade assets and that this insurance was a credit default swap. The problem was that they undervalued the cost of this insurance so that when some of these CDOs began to default, there wasn’t enough money to cover them. I also read on CNN Money the other day that the CDS market is working. These items seem to be contradictory if I understand them correctly. I don’t think I do, but what am I missing?

Thanks,  
Rob

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**Author:** ![KneadToKnow](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kneadtoknow/32/3999_2.png) [@KneadToKnow](https://boards.straightdope.com/u/KneadToKnow)\
**Post date:** [March 24, 2009, 8:34pm UTC](https://boards.straightdope.com/t/what-did-aig-do-exactly/490634/2 "2009-03-24T20:34:30Z")

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Wikipedia lists their industries as “insurance, financial services,” and their products as “insurance annuities, mutual funds,” so it sounds to me like their principle line of business was insurance with investment banking on the side.

The Wikipedia article has a nice chronological breakdown of their troubles of late: [American International Group - Wikipedia](http://en.wikipedia.org/wiki/Aig#Financial_crisis)

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**Author:** ![Duckster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/duckster/32/1244_2.png) [@Duckster](https://boards.straightdope.com/u/Duckster)\
**Post date:** [March 24, 2009, 9:43pm UTC](https://boards.straightdope.com/t/what-did-aig-do-exactly/490634/3 "2009-03-24T21:43:02Z")

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More here —\> [AIG’s Six Year Saga Of Alleged Fraud](http://www.huffingtonpost.com/2009/03/24/aig-fraud-history_n_178545.html)