BENDING THE RULES AGAIN OR...

good money chases bad money. The huge insurer AIG is allowed to move good assets to prop up its part of the Big Shitpile:

AIG Seeks Funds From JPMorgan, Goldman After Fed Balks at Loan

By Hugh Son

Sept. 15 (Bloomberg) -- American International Group Inc., the biggest U.S. insurer by assets, may be propped up by $70 billion to $75 billion in loans arranged by Goldman Sachs Group Inc. and JPMorgan Chase & Co., according to people familiar with the situation.

Wall Street's biggest firms are working together to avoid a failure at AIG, which sold the banks and other investors protection on $441 billion of fixed-income assets, including $57.8 billion in securities tied to subprime mortgages.

``I don't know of a major bank that doesn't have some significant exposure to AIG,'' said Kenneth Lewis, chief executive officer of Bank of America Corp., in a CNBC interview. An AIG collapse would ``be a much bigger problem than most that we've looked at.''

AIG was given special permission to access $20 billion of capital in its subsidiaries to free liquidity, New York Governor David Paterson said today. The move gives the insurer time to work on securing more capital, he said.

The insurer ``needs immediate access to capital'' and will be able to swap illiquid assets to free up holdings at its subsidiaries, Paterson said. Each time AIG uses assets as collateral for cash loans, the insurance department will examine the transaction to protect policyholders.

``We have seen some of the companies that serve as the bedrock of our financial system unraveling before our eyes,'' Paterson said.

This is what seems to be happening:

AIG Seeks Huge Loan As Stock Dives 61%
By MATTHEW KARNITSCHNIG and LIAM PLEVEN
September 16, 2008
Wall Street Journal

New York, though, may allow AIG to move certain assets that are harder to liquidate quickly into its insurance subsidiaries, where they would back up possible future claims, and then shift more easily tradable assets, such as municipal bonds, to the parent company. The parent company could then borrow against those more liquid assets, which could in turn help ease its needs for cash in the short term.