New York Times : Where Did the Cash Go?

I have discovered that a majority of the problems concerning A.I.G. came from mortgages that went bad. Similar to banks, large companies are able to offer people loan who might not be able to get loans from a bank. For example, if someone were to walk into a bank with terrible credit, or is barely making enough money to pay off the monthly mortgage rate, the bank will most likely deny the request. A large company like A.I.G. might loo at this as an opportunity to make some money, they will give these people a loan that has an outrageous amount of interest on it. The company will get the money that was borrowed back from the people through monthly increments, but they will also be making at least .5 to 3 times as much money as they lent. At the end of the process, the company might make 50,000 to 300,000 dollars on a 100,000 dollar loan. This is theoretically a very effective way to swindle the public out of there money, but when many sub-prime loans default at the same time, the company loses a lot of money. This is what happened in this case with A.I.G. This article clearly states that the majority of A.I.G.'s downfall is because out these sub-prime loans.