Financial Products unleashed techniques that others on Wall Street rushed to emulate, creating vast, interlocking deals that bound together financial institutions in ways that no one fully understood and contributed to the demise of its parent company as a private enterprise. In the panic of mid-September’s crash, the Bush administration said that AIG had grown too intertwined with the global economy to fail and made the extraordinary decision to take over the reeling giant. The bailout stands at $152 billion and counting — almost 10 times as large as the rescue for the American auto industry. [1]
The Post’s 3-part series looks like it’s going to be an extensive must-read guide to understanding what just hit the world’s financial services industry.
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[1]: "The Beautiful Machine", by Robert O’Harrow Jr. and Brady Dennis, Washington Post, December 29, 2008.
Here are the other two parts, and one of the associated resources.
“A Crack in The System: Second of Three Parts”, by Brady Dennis and Robert O’Harrow Jr., Washington Post, December 30, 2008.
“Downgrades And Downfall: Third of Three Parts”, by Robert O’Harrow Jr. and Brady Dennis, Washington Post, December 31, 2008.
“The Crash: 2005-2008″, supplementary info on AIG story, Washington Post, undated.
This is interesting …
I recently finished reading Kate Jennings’ novel Moral Hazard and pinged on her implying as a commonplace that New York’s investment banks were chock full of retired military types and spooks.
If I’m reading between the lines of these two paragraphs from Part I, then there is a certain expectation that sharing your business and personal details with AIG since WW II (and by extension with its US-flagged competitors) was equivalent to sending them to the American intelligence community.
It might not even be too speculative to suggest that close contact with Wall Street could have had a corrosive effect on the spooks and their product.