Question

What are the main reasons AIG failed?

My doubt is from u.s.life insurance topic

I have been asked this question during an interview for a job.

Other related questions to my question are:

What are the main reasons AIG failed?

What is wrong with AIG?

Why was AIG in so much financial trouble?

Why did AIG fail in CDS business?

Answer 1

Correct answer for this question is: AIG's failure was possible because of the sweeping deregulation of over-the-counter (OTC) derivatives, including credit default swapscredit default swapsA credit default swap (CDS) is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a debt default (by the debtor) or other credit event. That is, the seller of the CDS insures the buyer against some reference asset defaulting.https://en.wikipedia.org › wiki › Credit_default_swapCredit default swap - Wikipedia, which effectively eliminated federal and state regulation of these products, including capital and margin requirements that would have lessened the likelihood of AIG's failure.Jan 27, 2011

The title of my answer is Credit default swap

The reference of my answer is Wikipedia