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During the housing boom between 2 0 0 3 and 2 0 0 7 , the American International Group ( AIG ) , the biggest
During the housing boom between and the American International Group AIG the biggest issuer of credit default swaps, sold several trillion dollars of these swaps with only a few billion dollars in capital to back them up During the financial crisis, AIG could not cover the losses it had insured and went bankrupt. This happened because AIG:
overestimated the risk.
gave out too many loans.
overestimated the amount of money in its reserves.
underestimated and mispriced the risk.
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