Comments on: US still burdened by financial woes http://www.investmentpostcards.com/2010/02/02/us-still-burdened-by-financial-woes/ Prieur du Plessis’s international investment blog Sun, 29 Jan 2012 22:06:48 +0000 hourly 1 http://wordpress.org/?v=3.1.1 By: Warrenhttp://www.investmentpostcards.com/2010/02/02/us-still-burdened-by-financial-woes/comment-page-1/#comment-23073 Warren Wed, 03 Feb 2010 00:19:49 +0000 http://www.investmentpostcards.com/?p=16704#comment-23073 My understanding of the AIG debacle is that the London trading desk of AIG entered into Credit Default Swaps (CDSs)without hedging their position(s). Insurance companies are mostly regulated at the state level which might explain why AIG's London activities were not adequately monitored by regulators. Although incredibly stupid from a risk management standpoint, it does not appear to be illegal to take bets with Credit Default Swaps without laying off an appropriate amount of risk to others or hedging one's position(s).I think the American taxpayer wants to hear that all of the irresponsible traders in AIG's London office were let go (without severance or bonuses)and civil law action was taken to recoup any losses caused by traders who failed to follow any risk management parameters that hopefully were in place but tragically ignored! If my understanding of AIG's travails are incorrect, please comment and elaborate. My understanding of the AIG debacle is that the London trading desk of AIG entered into Credit Default Swaps (CDSs)without hedging their position(s). Insurance companies are mostly regulated at the state level which might explain why AIG’s London activities were not adequately monitored by regulators. Although incredibly stupid from a risk management standpoint, it does not appear to be illegal to take bets with Credit Default Swaps without laying off an appropriate amount of risk to others or hedging one’s position(s).

I think the American taxpayer wants to hear that all of the irresponsible traders in AIG’s London office were let go (without severance or bonuses)and civil law action was taken to recoup any losses caused by traders who failed to follow any risk management parameters that hopefully were in place but tragically ignored! If my understanding of AIG’s travails are incorrect, please comment and elaborate.

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