THE AIG SCANDAL

Question 1

A global insurance company central to the 2008 financial crisis due to risky financial practices like credit default swaps (CDS).

Answer 1

AIG

Question 2

AIG WAS FORMED ON

Answer 2

1919

Question 3

(YEAR) Investigations revealed fraud and financial misreporting.

Answer 3

2004

Question 4

(YEAR) AIG faced a liquidity crisis, leading to a government bailout.

Answer 4

2008`

Question 5

CEO of AIG during its unethical and fraudulent activities.

Answer 5

Hank Greenberg

Question 6

CEO of General Reinsurance, involved in fraudulent deals with AIG.

Answer 6

Ron Ferguson:

Question 7

New York Attorney General who sued AIG for fraud and deception.

Answer 7

Eliot Spitzer:

Question 8

AIG’s executives prioritized personal profits over the company’s stability, leading to decisions that put the company at great risk.

Answer 8

AGENCY PROBLEM

Question 9

AIG falsified financial statements to appear stable and paid large bonuses to executives after receiving a government bailout, ignoring ethical standards.

Answer 9

Ethical Behavior

Question 10

AIG ignored the balance between risk and return, selling high-risk products like CDS without proper precautions, leading to catastrophic losses when the market collapsed.

Answer 10

Risk and Return trade off

Question 11

AIG failed to manage the risks associated with credit default swaps, misjudging the exposure to subprime mortgages, which caused huge financial losses.

Answer 11

Risk Management:

Question 12

To maintain its dominance in the insurance industry, AIG engaged in fraudulent accounting practices, inflating its stock price to stay ahead of competitors.

Answer 12

Curse of Competitive Markets:

Question 13

AIG misled regulators and the public by falsifying financial statements, hiding its true financial condition, which ultimately led to a loss of public trust.

Answer 13

Transparency: