Indeed, under the U.S. governments bailout of AIG, the largest component was to satisfy counterparty claims in
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Indeed, under the U.S. government’s bailout of AIG, the largest component was to satisfy counterparty claims in AIG credit default swaps (CDSs). Under AIG CDS programs, if AIG was downgraded (e.g., from AAA to BB) then the CDS contract had to be marked to market and marking to market losses of AIG paid to the CDS counterparty. Since AIG was close to insolvent, these losses were borne by the U.S. government as part of the AIG bailout.
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Financial Markets And Institutions
ISBN: 9781259919718
7th Edition
Authors: Anthony Saunders, Marcia Cornett
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