Monday, November 3, 2008

Faulty computer models cost AIG tens of billions of dollars

Computer models relied on by insurance giant AIG to evaluate more than $400 billion of credit-default swaps did not measure the risk of future collateral calls or write-downs. The deficiency, of which AIG was aware, reportedly cost it tens of billions of dollars and pushed the federal government to rescue the company in September 2008.

See, "Behind AIG's Fall, Risk Models Failed to Pass Real-World Test," Wall St. Journal, October 31, 2008, at

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