The latest Wall Street firm to be headlining the financial news is American International Group (AIG), the largest insurance firm in America that is involved with life insurance and credit default swaps, as well as car insurance that I've been hearing about on the radio (they will come out and change a flat tire for me), and generally a broad range of insurance products. Their stock value (AIG) has followed almost exactly the pattern of Fannie Mae and Freddie Mac, plateauing at just over $60 a share until late 2007, then a steady decline since to around $3 today. As usual, they have given us the song and dance about being "well capitalized" while scrambling for cash—to the tune of asking the Federal Reserve for a $75 billion loan.
Personally I cannot get excited about the downfall of an insurance company; they are the embodiment of the risk aversion seemingly inherent to American culture, if not human nature, that ultimately leads to the expectation that higher powers will fix everything that goes wrong. However, if AIG goes down, their involvement in credit default swap market will likely have diffuse implications in the ongoing financial turmoil.