Is any company too big to fail? That was the question of the day facing political leaders in September 2008 as the market was rocked by a series of announcements from AIG and other companies concerning what some experts would call catastrophic losses from mortgage-backed securities. AIG happened to be the ringleader of those companies as it announced that it lost nearly $25 billion in one quarter. The U.S. government quickly discerned that the world markets would suffer great difficulties if AIG was allowed to go under and pledged billions of dollars to AIG in an effort to stabilize worldwide markets. When all was said and done, it cost the American taxpayers nearly $182 billion to save AIG from the results of its own actions.

A scenario like the one which AIG engendered leads to an interesting question; who are the stakeholders of AIG, who stood to benefit, who...
[ View Full Essay]