[Rockingham]

The financial crisis has many authors. Bad loans and the government policies that promoted them are to blame, but the world shaking scale of the problem is because Wall Street sold mortgage backed securities that kept the game going for far too long. And it was AIG writing insurance for those securities that enabled them to be marketed.

Just because there is a risk created by government policies does not mean that an insurance company must write policies for that risk. Indeed, basic underwriting principles hold that a lack of knowledge about a risk requires that a company not write a policies to cover it.

As it happens, there was head scratching in the European financial press when AIG wrote insurance for mortgage CDOs. Why would they do it? The crew that wrote the insurance was being lavishly paid and generated fat premiums. They wrecked AIG, leaving the US taxpayer to pay the bill and pay for extravagant bonuses to those responsible.

[Kansas58]

Again
The government required the bad loans to be made in the first place.
What happened after the fact was not good at all, but -— it never would have happened without the government mandate to write risky loans.