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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: axial who wrote (18041)	3/1/2009 10:52:29 PM
From: Hawkmoon	1 Recommendation Read Replies (4) \| Respond to of 71463

Why has AIG's role been underplayed? We can only guess. But AIG (like many insurers) was big into ART (Alternative Risk Transfer) - in all forms, including CDSes. Well.. it depends on who had most leverage in determining the prices at which AIG wrote protection on those assets. It was (and remains) a very competitive market with low profit margins versus risk being taken. I still hold that the majority of insurers were the victims of an orchestrated fraud by the IB's and Rating Agencies, both of which understood that their risk models were flawed in assigning AAA. From what I've discerned, most of the biggest insurers pretty much stuck to AAA-AA rated debt. And they priced according to the CDS spread, which in turn were guided by ratings being assigned to those assets. Insurers, were forced to compete in an artificially DEFLATED risk environment where risk was actually higher than being modeled by the RAs. Thus, even if they can be accused of making bad decisions in writing their insurance, I fault the banks and the rating agencies who LIED ABOUT THE PRODUCTS they wanted insured for this mess. They committed the FRAUD, not the insurers. Hawk