Basel almost destroyed AIG

Author: | Published: 17 Nov 2008
Basel II encourages financial institutions to gamble

Basel II is flawed. It encouraged banks to reduce their capital requirements by obtaining guarantees from insurers. This not only left the banks undercapitalised, it undermined the integrity of insurers such as AIG.

AIG nearly became a victim of the credit crunch. Unable to raise funds to sustain its own regulatory...