In 2008, AIG faced an imminent financial collapse brought on by its Financial Products unit, which sold massive quantities of unhedged credit default swaps protecting toxic subprime mortgage-backed securities against default. When housing markets crashed and credit agencies downgraded AIG's ratings, massive collateral calls triggered a severe liquidity crisis. To avert a global economic meltdown, the U.S. government intervened with a massive emergency bailout loan in exchange for a controlling equity stake.
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