This is what Fed Chairman Ben Bernanke had to say about AIG when he appeared before the Senate Budget Committee:
“If there is a single episode in this entire 18 months that has made me more angry, I can’t think of one." AIG “exploited a huge gap” in the regulatory system: it became a “hedge fund, basically, that was attached to a large and stable insurance company” and made “huge numbers of irresponsible bets.”
Bernanke, a Republican appointed by former President Bush, tacitly endorsed a Keynesian approach: lots of government spending with the trillion dollar deficits that imples are necessary to get through the economic crisis.
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