AIG: Ratings were the Real Problem

Putting aside the issue of whether or not AIG should have been offering 'insurance' to firms insuring against losses on securities (notably those related to U.S. mortgages), the principle reason this whole ting started was because AIG’s ratings were downgraded.

Pure and simple: Had AIG’s ratings not been downgraded, perhaps, just perhaps, the global downward economic spiral might not have happened.

Which brings up the point that AIG recognized the potential for disaster several years ago when it stopped writing this type of business.