default swap. >> that's it contract between two people, one of whom is giving insurance to the other, that he will be paid in the event in the event that the financial institution fails. >> it's an insurance contract. >> it is an insurance contract that they been very careful not to call it that, because if it were insurance, it would be regulated. >> aig essentially facilitated the creation of a lot of these mortgage securities by essentially providing an insurance policy, should they go bad. but, because the derivatives market had been deregulated, aig could do this without any requirement to put up any reserves. it's like an insurance company is selling you a life insurance policy and not having any money when the time came to pay off and the time came to pay off. >> after its credit rating was downgraded overnight, aig must raise at least 40 billion dollars, and fast. >> you had a full scale run on