Ailing insurer American International Group has racked up some $10-billion in IOUs to top Wall Street firms.
The "Wall Street Journal" says AIG split with its usual practice of insuring deals for brokerages and instead tried to act like one.
It gambled its own money on securities tied to pools of home loans, including sub-prime mortgages.
Essentially, it speculated on the health of those securities.
As the real estate market tanked, the bets came due.
The ten-billion dollar sum isn't covered by AIG's $150-billion federal bailout, raising questions about how it intends to make good on those bad bets.
The Federal Reserve structured AIG's bailout to buy up the securities that it insured, but that doesn't help AIG wiggle out of its IOUs.
AIG says that including the bad bets, its total exposure is 71-point-six billion dollars on the whole shaky home loan pyramid.
(Copyright 2008 by Newsroom Solutions)