The primary catalyst for AIG's near-collapse during the 2008 financial crisis was its Financial Products division based in London, which engaged in writing massive volumes of unregulated credit default swaps (CDS) without holding adequate capital reserves to cover potential systemic market downturns. When the subprime mortgage market crashed, the unit faced catastrophic collateral calls it could not cover independently, necessitating emergency government intervention to stabilize the global financial system.
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