AIG Analogy

Here's a good three part article on AIG in the Washington Post.  How did this happen?  Why are we (the tax payers) shelling out billion after billion to clean up the corporate equivalent of the Titanic?  To draw two analogies:

• AIG Financial Products was like an insurance company that insured against earth quakes but had never actually seen one - they didn't really believe that earth quakes existed, so they considered the risk that they might have to be cover one to be tiny.
• AIG Financial Products was like an insurance company that insured against earth quakes but wrote all of their policies for San Francisco.

Combine these things and you can see how it only took one big earthquake to completely knock them over.

If ever there was a company that made money by picking up nickels in front of steamrollers, AIG was it.