Oops. Make that a sand hill.
The New York Times says:
State regulatory filings ... show that A.I.G.’s individual insurance companies have been doing an unusual volume of business with each other for many years — investing in each other’s stocks; borrowing from each other’s investment portfolios; and guaranteeing each other’s insurance policies, even when they have lacked the means to make good. Insurance examiners working for the states have occasionally flagged these activities, to little effect.
More ominously, many of A.I.G.’s insurance companies have reduced their own exposure by sending their risks to other companies, often under the same A.I.G. umbrella.
Ah, Jeez. Here we go again. Two interesting elements that emerge from this article: (1) State insurance regulators were impotently flagging concerns but couldn't get their arms around the magnitude of the problem so we might ask ... where the hell is a federal regulator for AIG? Can't we at least get one of those up and running while we're dithering on health care reform and waiting for the stimulus package to kick in all the way? (2) AIG is making cooing noises of unconcern ... where have we heard that before? Oh yeah: a certain employee, a Joe Cassano, said that the chances of his financial products division losing even a nickel were practically zero. Guess how that turned out?
So who owns this mega-turd called AIG? Umm, that would be ... the ... U.S. taxpayer! Wow. We really are suckers. This is the metaphor I keep thinking of for the U.S. government: He's a fat kid. A rich kid. You recognize him on the playground immediately and run over to him. Why? Because he's such a great guy? No, because change is always spilling out of his pockets. Or he's buying something ridiculous and you just can't believe it. "He paid Jim $40 for that dead cricket? He bought ten boogers off Lester for $10? I wonder what he'll give me for this dirty candy bar wrapper?"
I think Obama made a big misjudgment on this financial crisis. I think he thought he could skate through, not shake too many trees and not upset too many people, and thus be well-fortified politcally to deal with other pet issues, such as health care reform. I think he made a big mistake by not clearing the decks and taking this first year of his term just to sort out the many, many problems of this financial crisis and help sculpt a much more robust system going forward.