The American Insurance Group, more commonly known as AIG, is one of the largest insurance companies in the world.
It was a major player in the Financial Crisis of 2008 because it sold $441 billion in unhedged and undercapitalized insurance on securitized debt, much of it tied to mortgage values. AIG sold many credit default swaps. Normally an insurance company "lays off" some of the risk by taking out insurance with another company. AIG neglected to do this because it never expected the securities to turn toxic, which they did. Either someone paid the insurance or the nation's financial system would colapse, so the government stepped in, seized AIG, and paid the insurance.During the 2008 financial crisis, TARP funds were made available by the Bush administration and the Federal Reserve after facing the prospect of bankruptcy. The government has lent over $170 billion to shore up AIG because it insured big banks against losses from securities that turned out to be "toxic" and lost much of their value.
In March 2009 a firestorm of public protest exploded when it was discovered the U.S. Treasury under Secretary Timothy Geithner had allowed AIG to pay $160 million in employment contract bonuses for work in 2008 to the AIG traders who caused over $60 billion in losses in 2008. AIG's employment contracts were written without factoring in the possibility that credit default swaps could result in losses when borrowers default.
According to a Thomas More Law Center lawsuit, at least a portion of $40 billion AIG reciev ed in TARP funds has been used to support Sharia-compliant financial products. AIG has been using taxpayer money to promote Islam and Shariah law. The government acquired a majority interest in AIG and at least two of AIG subsidiary companies practice Sharia-compliant financing. In addition, the federal government co-sponsored a forum entitled Islamic Finance 101.