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Dinakar

Nobody • 1y

And the housing market fell. The people who should not have gotten the loan in the first place were not able to repay the loan as the amount was increased. But at the end of the day these CDOs were insured right? Yes, but AIG became too greedy and they did not have enough funds to cover the costs of the bearers. AIG was deemed too big to fail as it was one of the biggest insurance companies and almost every other big banks and insurance companies had their policies, so if they failed, the global economy would have been doomed. So the government bailed them out by giving a massive cash loan to pay out these credit default swaps.

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[This post has been deleted by the creator]

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