Conceivably, its failure could have triggered a 1930s-style global financial and economic meltdown, with catastrophic implications for production, incomes, and jobs. The Federal Reserve and the Treasury agreed that in the environment then prevailing, AIG's failure would have posed unacceptable risks for the global financial system and for our economy.
For instance, vulnerabilities could be quickly unearthed if market liquidity – hard to measure but currently seen by many market observers as more abundant than ever – were abruptly and sharply to decline, for example as a result of an unexpected deterioration in investors’ risk appetite.