Paulson adds to AIG folly

By Peter Morici

US Treasury Secretary Henry Paulson's decision to inject another US$27 billion into failed insurer AIG and raise the taxpayers' investment to $150 billion suggests he is more intent on helping his pals on Wall Street than protecting taxpayer interests.

AIG has solid businesses in industrial, commercial and life insurance, but like a lot of financial firms was attracted to easy profits writing credit default swaps on mortgage-backed bonds - so called collateralized debt obligations (CDOs).