# AIG **American International Group (AIG)** is a global insurance company whose near-collapse in September 2008 produced the single largest government rescue of a private firm in the [[2008 Financial Crisis]]. Beginning with an $85 billion Federal Reserve loan on **September 16, 2008** — the day after [[Lehman Brothers]] fell — the bailout ultimately reached **$182 billion**, in exchange for warrants giving the government a 79.9% ownership stake. AIG was brought down not by its insurance business but by a small London-based unit, **AIG Financial Products**, which had written hundreds of billions of dollars in **credit default swaps** — unregulated insurance-like contracts promising to cover losses on mortgage securities. Those swaps were exempt from oversight under the [[Commodity Futures Modernization Act]] of 2000. When the underlying mortgage bonds soured, AIG owed collateral it could not pay, and because its counterparties were the world's largest banks (Goldman Sachs, Deutsche Bank, and others), its failure would have cascaded through the entire system. The rescue was, in effect, a **backdoor bailout of those counterparties**, who were paid out at 100 cents on the dollar — a detail that became a lasting scandal. AIG repaid the full $182 billion by January 2013, and the government booked a combined positive return of about $22.7 billion. For the KB, AIG is the keystone of the [[Shadow Banking]] and deregulation through-line. It demonstrates exactly how the [[Commodity Futures Modernization Act]]'s exemption of derivatives manufactured systemic risk, and how [[Too Big to Fail]] operates through interconnection rather than size alone — AIG had to be saved not for its own sake but because of who it owed. The "AIG bonuses" episode (retention bonuses paid to Financial Products staff with bailout money in early 2009) became one of the most politically toxic moments of the crisis, feeding directly into the bailout fury that birthed the [[Tea Party Movement]]. ## See Also - [[2008 Financial Crisis]] - [[Commodity Futures Modernization Act]] - [[Shadow Banking]] - [[Too Big to Fail]] - [[Lehman Brothers]] - [[Financial System Timeline]] - [[Financial System Hub]]