It had to happen sometime. This morning it was announced that U.S. regulators have closed an investigation of AIG and some of its executives over the insurance giant’s near collapse that led to a $182 billion government bailout.

Let’s take a look at the timeline of many of the events surrounding the AIG disaster (with help from ProPublica, the New York Fed and Bloomberg).

• August 5, 2007: During a conference call with investors, various high-ranking AIG officials stressed the near-absolute security of the credit-default swaps. “The risk actually undertaken is very modest and remote,” said AIG’s chief risk officer. Joseph Cassano, who oversaw the unit that dealt in the swaps, was even more emphatic: “It is hard for us with, and without being flippant, to even see a scenario within any kind of realm of reason that would see us losing $1 in any of those transactions…. We see no issues at all emerging. We see no dollar of loss associated with any of that business.” Martin Sullivan, AIG’s CEO, replied, “That’s why I am sleeping a little bit easier at night.”
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• October 1, 2007: Joseph St. Denis, the VP of Accounting Policy at AIG Financial Products, resigns after Cassano tells him, “I have deliberately excluded you from the valuation of the [credit-default swaps] because I was concerned that you would pollute the process.”
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• November 7, 2007: In an SEC filing, AIG reports $352 million  in unrealized losses from its credit-default swap portfolio, but says it’s “highly unlikely” AIG would really lose any money on the deals.
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• December 5, 2007: In an SEC filing, AIG discloses $1.05 billion to $1.15 billion in further unrealized losses to its swaps portfolio, a total of approximately $1.5 billion for 2007. During a conference call with investors, CEO Martin Sullivan explains that the probability that AIG’s credit-default swap portfolio will sustain an “economic loss” is “close to zero.” AIG’s risk-modeling system had proven “very reliable,” Sullivan said, and since the transactions were so “conservatively structured,” AIG had “a very high level of comfort” with its risk models.
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• February 28, 2008: In its year-end regulatory filing, AIG sets its 2007 total for unrealized losses at $11.5 billion. AIG also discloses that it had thus far posted $5.3 billion in collateral. It’s the first time the company has disclosed the amount of posted collateral. AIG puts the notional value of the entire swaps portfolio at $527 billion. But as we said above, about $61 billion of the swaps had exposure to subprime mortgages. AIG also announces that Joe Cassano, the chief of the unit that dealt in the swaps, has resigned. What AIG doesn’t disclose is that he’s kept on under a $1 million per month consulting contract.
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• August 6, 2008: In its second quarter filing, AIG ups its unrealized loss in 2008 from the credit-default swaps to $14.7 billion, for a grand total loss of $26.2 billion. It also discloses another impressive number: It’s posted a total of $16.5 billion in collateral.
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• September 16, 2008: The Federal Reserve Board saves AIG by pledging $85 billion [11]. As part of the deal, the government gets a 79.9 percent equity interest in AIG.
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• October 8, 2008: The Fed pledges another $37.8 billion to AIG.
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• November 10, 2008: Board of Governors and Treasury announce the restructuring of the government’s financial support to AIG. The restructuring includes a Treasury purchase of AIG preferred shares through the Troubled Asset Relief Program (TARP), reduction of $85 billion revolving credit line to $60 billion and the creation of two limited liability companies (LLCs) to lend against AIG’s residential mortgage-backed securities (RMBS) and collateralized debt obligations (CDOs).
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• March 15, 2009: AIG, under pressure from regulators, releases a statement that discloses the names of its counterparties, which includes banks such as Goldman Sachs and Deutsche Bank AG. The counterparties received about $50 billion in forfeited collateral postings and Maiden Lane III payments since the Sept. 16, 2008, rescue, the statement says. The statement lists a sum of payments to each bank. It doesn’t identify the securities tied to the swaps or list the value of individual purchases by the banks.
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• March 18, 2009: AIG Chairman and Chief Executive Officer Edward Liddy testifies before House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises.
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• March 24, 2009: Federal Reserve Chairman Ben S. Bernanke and New York Fed President William C. Dudley testify before House Committee on Financial Services.
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• May 7, 2009: AIG reports first quarter 2009 earnings. (Risk Management Monitor coverage)
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• May 21, 2009: Edward Liddy leaves AIG after eight grueling months acting as chairman and CEO with no pay. (Risk Management monitor coverage)
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• December 13, 2009: Eli Lehrer writes an editorial entitled “Kill AIG Now.” (Read Risk Management Monitor’s reaction to the piece, plus an in-depth comment from Lehrer himself)
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• Jan. 7, 2010: Bloomberg reports that e-mails obtained by Representative Darrell Issa show the New York Fed pressed AIG to withhold details from the public about the insurer’s payments to banks.
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• March 1, 2010: AIG agrees to sell its subsidiary American International Assurance Company Ltd. (AIA) to Prudential Financial, Inc. for approximately $35.5 billion.
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• March 8, 2010: AIG agrees to sell its subsidiary American Life Insurance Company (ALICO) to MetLife, Inc. for approximately $15.5 billion.
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• June 10, 2010: A Congressional watchdog criticized nearly every move the Fed has made during the AIG fiasco. “The government’s actions in rescuing AIG continue to have a poisonous effect on the marketplace,” said the congressional oversight panel led by Harvard University law professor Elizabeth Warren.
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• June 17, 2010: The SEC ends its probe of AIG and its executives.

No charges were ever filed against AIG or its executives, and since the Justice Department’s probe ended and May and the SEC’s probe ended today, no charges will likely ever be filed.

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