Or maybe it’s the whole damn system.<\/p>\n
The folks at Institutional Risk Analytics have concluded that AIG’s reinsurance business was little more than a Ponzi scheme<\/a> well before it set up its Financial Products division that took down the firm with its credit default swaps (CDS) business:<\/p>\n One of the first things we learned about the insurance world is that the concept of \u201cshifting risk\u201d for a variety of business and regulatory reasons has been ongoing in the insurance world for decades. Finite insurance and other scams have been at least visible to the investment community for years and have been documented in the media, but what is less understood is that firms like AIG took the risk shifting shell game to a whole new level long before the firm\u2019s entry into the CDS market.<\/p>\n In fact, our investigation suggests that by the time AIG had entered the CDS fray in a serious way more than five years ago, the firm was already doomed<\/span>. No longer able to prop up its earnings using reinsurance because of growing scrutiny from state insurance regulators and federal law enforcement agencies, AIG\u2019s foray into CDS was really the grand finale. AIG was a Ponzi scheme plain and simple<\/span>, yet the Obama Administration still thinks of AIG as a real company that simply took excessive risks. No, to us what the fraud Bernard Madoff is to individual investors, AIG is to the global financial community.<\/p><\/blockquote>\n The crux of this accusation is that they reinsurance contracts that they did not have the resources to back up.<\/p>\n