this story:

What killed AIG was much more likely the financial and managerial collapse within AIG Global Investment Corporation’s securities lending program…

It was the pure economic loss of capital in its most natural state. It represented the decline in value of assets AIGGIC purchased with the cash Wall Street’s banks and brokerages gave as collateral for borrowing stocks and bonds from its life insurance investment-management portfolios.

In other words, financial crisis junkies, it was not all Joe Cassano and credit default swaps. AIG had this “securities lending” unit that loaded up on mortgage securities.

What I need help understanding is what “securities lending” means. It sounds like, oh, we just happen to have lots of securities sitting on the shelf–would you like to borrow some for a while? But the way I think of it is in terms repurchase agreements. In repo, one side lends cash and the other side is said to lend securities. I would say that you are lending securities in the sense that you are lending your ring to a pawn shop. What you really are doing is borrowing, using the securities as collateral.

So, I interpret this story as saying that AIG had a “securities lending” unit which carried long-term, risky assets using very short-term repo funding. Is that interpretation correct?