AIG Regulator: We Should Have Stepped in Sooner

A “multitude of regulators” failed to spot the liquidity risk AIG was piling on until it was too late, and should have stepped in sooner, the Office of Thrift Supervision told the Senate today. A relatively small unit of AIG was piling up credit default swaps, and “no one predicted, including OTS, the amount of funds that would be required,” if those bets failed, the office’s acting director said. Had regulators realized, they would have made the insurer reduce its exposure. (More AIG stories.)