Just as straight-A students have been drawn to exotic areas of finance over recent decades, so have several firms with AAA credit ratings. General Electric (GE) relentlessly expanded its finance arm which handles everything from credit cards to property. American International Group (AIG) diversified from plain insurance into credit derivatives. And even Warren Buffett s Berkshire Hathaway was tempted to write a book of equity-derivative contracts that has recently created a big mark-to-market liability in its accounts. Just as plenty of AAA banks have been taken to the cleaners, so these non-bank firms have suffered too. AIG is now state-controlled, after ...

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