22  As documented by the Financial Crisis Inquiry Commission, from 1998 to 2007, AIG, through its subsidiary AIG Financial Products, built up huge indirect exposures to real-estate-backed debt by writing OTC credit protection on structured finance products, including mortgage-backed securities and collateralized debt obligations that were in many cases ultimately backed by mortgages.
Importantly, because AIG enjoyed a credit rating of AAA for much of this period, its derivatives counterparties did not typically require it to post collateral at the time that new contracts were written. Rather, AIG agreed to post collateral only if contracts fell in market value and AIG itself was downgraded. AIG was first downgraded to AA in the spring of 2005.