The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Fall of AIG

  • William K. Sjostrom
Reference work entry


This article provides a brief overview of AIG’s operations and explains why AIG suddenly collapsed. It then details the terms of the initial US government bailout and later restructurings. Finally, the article describes the regulatory gap exploited by AIG and ensuing regulatory reform.


AIG American International Group CDO CDS Collateralized debt obligations Credit default swaps Derivatives Tranching 

JEL Classifications

K20 K22 G8 G28 G38 
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  1. AIG Annual Report. 2007.Google Scholar
  2. AIG Quarterly Report, September, 2008.Google Scholar
  3. Financial Crisis Inquiry Commission. 2011. The financial crisis inquiry report.Google Scholar
  4. Mollenkamp, C. et al. 2008. Behind AIG’s fall, risk models failed to pass real-world test. Wall Street Journal, 3 November, at A1.Google Scholar
  5. President’s Working Group on Financial Markets 1999. Report of the presidents working group on financial markets, over-the-counter derivatives markets and the commodity exchange act.Google Scholar
  6. The Federal Reserve Board. 2008. Press release, 16 September.Google Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • William K. Sjostrom
    • 1
  1. 1.