Just because it's one division and they covered it all up with excuses like complex math, or structured finance does it make it less of a scam and a fraud?
The New York Times article Propping Up a House of Cards has gone a little more in depth on precisely what was going on inside AIG and why (supposedly) it couldn't fail (Joe Nocera Journalist).
When you start asking around about how A.I.G. made money during the housing bubble, you hear the same two phrases again and again: “regulatory arbitrage” and “ratings arbitrage.” The word “arbitrage” usually means taking advantage of a price differential between two securities — a bond and stock of the same company, for instance — that are related in some way. When the word is used to describe A.I.G.’s actions, however, it means something entirely different. It means taking advantage of a loophole in the rules. A less polite but perhaps more accurate term would be “scam.”
This was one division repackaging up credit default swaps and using AIG's AAA credit rating to cover up the stink.
Even worse, AIG never put up any capital reserves to cover the assets they were insuring. On top of it, they even wrote into contracts more financial obligations if credit ratings were downgraded.
A huge part of the company’s credit-default swap business was devised, quite simply, to allow banks to make their balance sheets look safer than they really were.
And this piece of news, all of those people trying to claim they just don't know what happened, well according to this report:
Everybody knew the capital requirements were being gamed, including the regulators.
Why aren't they letting AIG go to the dogs and default? Because all of the derivatives, those lovely credit default swaps will blow up and cause global losses.
My question is since it's obviously a ponzi scheme and a scam, how can the U.S. taxpayer be left on the hook to perpetuate the entire system?
Other reports are claiming AIG will be broken up.
Oh yeah, in terms of criminal charges, our government as well as many others made all of this perfectly legal as far as I know. Outraged yet?
Read the entire article in the link, gives great details.