How AIG Became Too Big to Fail

Years of unregulated and risky deals exposed the insurance giant to catastrophic losses. Now it's paying bonuses to the same people who created the mess. With our money. A look at why a dark corner of the global economy is costing taxpayers $170 billion

Illustration by Clark Mitchell

AIG photo-illustration

Treasury Secretary Tim Geithner had every reason to think he had seen all of AIG's dirty laundry. The government owned 80% of the company, and Geithner had just orchestrated AIG's most recent handout — its fourth, if you are keeping score, for $30 billion on March 2 — to prevent the teetering insurance giant from going over the cliff and taking the rest of the global financial system with it. AIG had already cost the taxpayers some $170 billion, mostly to repair the damage done by one of its units, AIG Financial Products (AIG FP), which last year alone...

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