The business that earlier was their biggest asset was now killing them. In relation to before
when CDS were a secure income without risks it was now one of the most dangerous
financial instruments and almost everyone who had bought a CDS wanted their concern. AIG
was now very close to bankruptcy.
In september 2008 AIG’s credit rating was downgraded below AA and as a consequence of
this the company suffered a liquidity crisis. Even though AIG was on their way to collapse
and made much more losses than many other companies, they were not alone. The financial
crisis had hit the whole financial system very hard and there were more companies going
down. Lehman Brothers stood on the edge of bankruptcy.