Question: Why didn't Washington step to at least temper the risk?

Answer: Money. Just look at the who's who of senators receiving campaign contributions from AIG. According to Federal Election Commission data at the Center for Responsive Politics, Sen. Max Baucus, D-Mont., has received more money from AIG -- $91,000 -- than from any other contributing company. Baucus chairs the Senate Finance Committee. Dodd, the head of the Senate Banking Committee, has received $280,000 from AIG. (In the 2003-08 election cycles, AIG was only the fourth-largest contributor to Dodd; Citigroup (C, news, msgs) ranked No. 1.) And Dodd now admits he's the one who wrote the loophole that allowed AIG to award $165 million in bonuses to its financial-products group. (In his defense, Dodd says he inserted the language at the request of the Obama administration.)

AIG doesn't show up among the top 10 contributors to Shelby, but the ranking Republican on the Banking Committee does count Citigroup (at No. 1) and JPMorgan Chase (JPM, news, msgs) (at No. 3) among his top donors. Twenty-eight current members of Congress own stock in AIG. Sen. John Kerry, D-Mass., is the biggest investor, with stock valued at $2 million (it was valued at $2 million at the time he filed his lastest financial reports, anyway).

Congress has delivered a lot of other goodies in the past decade or so that have contributed to this crisis -- and made the cleanup more expensive and painful. For example, the Office of the Comptroller of the Currency and the Office of Thrift Supervision both moved to block states from enforcing their consumer-protection laws against any nationally chartered bank.

Among the measures states were prohibited from enforcing were rules against predatory lending. Not that the federal government stepped in for the states: The Federal Reserve took all of three formal actions against subprime lenders from 2002 to 2007, and the Office of the Comptroller, with authority over 1,800 banks, took only three enforcement actions from 2004 to 2006, according to Multinational Monitor.

But you get the idea by this point.