re: #368 Bagua

Yes, those are the redemptions I mentioned, essentially, there was a rumour driven run on the bank.

However, there was also accountancy that forced massive margin call based upon Fair Valuation. They didn’t actually “lose” any money and , as others have mentioned, mortgage defaults only played a minor role.

Well, I agree with you that it started that way. I think the accounting rules obliterated AIG because they had to post collateral with every institution they had insured against “losses”. Those institutions were using the insurance from AIG as required minimum equity and when the accounting rules caused them losses and those losses flowed through to their equity, they then called on AIG to make good on the insurance against loss they had purchased [which AIG sold to them for fractions of pennies in the dumbest move ever] and AIG was forced to give cash to the institution as collateral against the ultimate realized losses. Will never figure out why AIG was allowed to write that insurance at the holding company level. What a mess.