At today’s symposium, “Five Years Later: A Financial Crisis Symposium,” the true terror of the AIG meltdown served as a proper Halloween preface.
The federal government bailed out A.I.G., once the world’s largest insurer by market value, on Sept. 16, 2008, as losses skyrocketed from risky bets on mortgage debt. The New York-based company did the deals through credit-default swaps.
Ruth Porat, chief financial officer at Morgan Stanley who appeared on the panel, “Up & Down Wall Street: A Financial System on the Brink,” recalled the most frightening aspect of AIG’s meltdown was its speed and how it led to a domino effect.
“We saw how ephemeral liquidity was,” she said. “And we saw how the lack of oxygen smothering AIG could affect others… that those on the receiving end would have no time to prepare was the most frightening time for me.”
