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Eric Dinallo, former Superintendent of the NYS Insurance Department,
points out to Commissioner Keith Hennessey that AIG FP was in large
part able to take on absurd amounts of risk because market perception
viewed AIG FP in the context of its holding company, AIG. This meant
that the risk that AIG FP had was greatly offset by the assets that AIG
had--concealing to investors how much trouble AIG FP was truly in
because they could not easily view the division's balance sheet in an
isolated manner.

Does this mean that divisions that have
separate functions need to be more aggressively spun off? If AIG, which
had five different kinds of insurance, financial services, airplane
leasing, etc. had not been one overarching holding company, would AIG
FP have received market signals earlier, preventing the necessity of
the government's $182 billion bailout?