The more I hear about what AIG used to be doing the more I\’m wondering what in heck was going on there?
The suit, which was filed in New York, alleges Bank of America conducted a \”massive fraud\” over the sale of mortgage-backed bonds to AIG before the crisis.
The insurer, whose $182.3bn bail-out was the most controversial of all the rescues during the crisis, accuses businesses owned by Bank of America of \”grossly misleading\” AIG over the riskiness of loans used in the mortgages.
Through the London basde AIG Financial Products part, AIG was the major insurer of those bonds against default. And OK, I know they thought they would never default, that such insuring was money for nothing. Which might make it seem logical that other parts of AIG thus bought those very bonds because they thought they were safe.
But that\’s absurd behaviour for an insurance company. Double exposure to the same risk?
What were they doing?
Well, going bankrupt, obviously, but then that\’s why they shouldn\’t have been doing what they were.