Last September, as the big honchos of the financial world - the regulators and the bankers - were witnessing the imminent collapse of Lehman Brothers, they realized that they were facing a far bigger problem: The possible collapse of American International Group (AIG), the biggest insurance company in the world. If AIG collapsed, so the theory went, it would cause a chain-reaction that could potentially prove fatal to large number of financial institutions all over the world, plunging the world economies into a financial abyss!

Fear of financial meltdown was the reason given then for the taxpayer paid bailout of AIG, that would eventually rise to more than $160 billion. However what was not clear then, in what way AIG bailout would save the rest of the world. Even as some in the media did expose the role played by the independently operating but wholly owned subsidiary AIGFP and its unit in London headed by Mr. Cassano, under the name of innovative financial products and services was essentially gambling with AIG investors money. And yet it was not clear who were the partners in this gambling scheme who would ultimately get the counterparty claims.

Both AIG and the Feds hemmed and hawed around to release the names of these counterparties under the legalistic language of confidentiality agreements. And it would have continued that way till the AIG bonus-babies scandal broke last week, forcing AIG to issue the press release that gave partial list of trading partners/counter parties.

Below are the maps that show locations of financial institutions who were paid by AIG in the counterparty claims for the complex financial transactions such as Credit Default Swaps (CDS), repurchase of mortgage-backed securities and security lending obligations.

From these maps it would appear that the problem is limited to Western Europe and the U.S. And yet nearly $22 billion was paid to other counter parties, who probably are scattered all across the globe. The partial list of Western European institutions and those in the U.S. reads like who’s who in the financial world. A cross check with Madoff’s clients and TARP list reveals that many of these are the same players who lost billions in Madoff’s ponzi scheme and are also getting TARP money and its quite likely that these same set of players will show up for TARP-II, the TALF!

Talk about small-world! In the name of spreading risk, they have collectively managed to plunge the U.S. and rest of the world into the worst financial crisis since the Great Depression.

Your tax $ at work: AIG’s payment to financial institutions for Credit Default Swaps (CDS)

View the map in Maker! here

Your tax $ at work: AIG’s payment to financial institutions for Mortgage-backed securities

View the map in Maker! here

Your tax $ at work: AIG’s payment to financial institutions for Security lending obligations

View the map in Maker! here

Explore interactive map on the Maker!

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