Isn’t it against the law to write insurance policies without sufficient capital to cover losses? I would think this would be insurance fraud.
I’m certain it is! And, until recently AIG had no problem with that.
Why do they have a problem now?
Easy - mark to market rules (both in the US and in Europe)!
As long as mark to market continues to exist AND markets remain volatile - neither AIG, nor any major bank, nor the economy will recover.
Unfortunately, market volatility will not likley end even if mark to market were replaced. Thus BOTH problems need to be remidies at the same time. Thue “cure” for the one however, is poison for the other. Thats why we see NO plan from anyone other than “pump money into the market” and bailout bailout bailout which is like giving a severe accident victim an aspirin. He continues to bleed all over the place, but at least his headache is gone.
But alas he did not ask about insurance fraud. He asked about risk taking as if that were a crime.