When was aig bailout

After 50 years as president of Cuba, Fidel Castro stepped down from the position. AIG ran into big problems when it ramped up its credit default swap selling in an effort to boost margins. When the housing market tanked, those swaps pushed AIG to the brink of bankruptcy. AIG had more than enough assets at the time to cover its obligations, but it was unable to sell enough assets before the swaps came due. On Sept. At the same time, the U. At the time, many Americans were outraged about the government bailouts, but they ultimately proved profitable for taxpayers.

Photo: David Shankbone , via Wikimedia Commons. Benzinga does not provide investment advice. Securities lending lost the company a massive amount of money as well. Securities lending is a common financial transaction where one institution borrows a security from another and gives a deposit of collateral, usually cash, to the lender. Say, for instance, that you run a fund with a large investment in IBM.

AIG was primarily lending out securities held by its subsidiary life insurance companies, centralized through a noninsurance, securities lending—focused subsidiary. Companies that lend securities usually take that cash collateral and invest it in something short term and relatively safe. But AIG invested heavily in high-yield—and high-risk—assets. This included assets backed by subprime residential mortgage loans.

The borrowers of a security can typically terminate the transaction at any time by returning the security to the lender and getting their collateral back. Government lawyers have defended the actions as appropriate, pointing out that the deal had been approved by the AIG board, as the company faced no other alternative to bankruptcy.

Lawyers at the U. Department of Justice have described the case as a "conspiracy theory" and "built on a mistaken premise. But U. The case poses two central questions. The 5th Amendment to the U.