American International Group is the latest concern in the crisis on Wall Street. Allowing AIG to fail to meet its commitments would, however, be far more dangerous than allowing Lehman to do so. A res­ponsible government has to ensure an orderly resolution. But this crisis makes effective reform of US financial regulation even more pressing.

AIG’s problems stem from its $441bn exposure to credit-default swaps and other derivatives. Losses on these contracts have driven AIG into a vicious downwards spiral in which it needs ever more cash to remain a highly-rated counterparty. JPMorgan and Goldman Sachs have been charged by the government with finding as much as $75bn from private sources in order to rescue the situation.