Did Goldman help push AIG to the edge?

New York Times reporters Gretchen Morgenson and Louise Story have a new article this weekend examining the dispute between Goldman Sachs and AIG over collateral calls on credit default swaps. Testy Conflict With Goldman Helped Push A.I.G. to Edge is a lengthy piece with bits of new information added throughout. Here is a snip to wet your appetite:

In just the year before the A.I.G. bailout, Goldman collected more than $7 billion from A.I.G. And Goldman received billions more after the rescue. Though other banks also benefited, Goldman received more taxpayer money, $12.9 billion, than any other firm.

In addition, according to two people with knowledge of the positions, a portion of the $11 billion in taxpayer money that went to Société Générale, a French bank that traded with A.I.G., was subsequently transferred to Goldman under a deal the two banks had struck.

Goldman stood to gain from the housing market’s implosion because in late 2006, the firm had begun to make huge trades that would pay off if the mortgage market soured. The further mortgage securities’ prices fell, the greater were Goldman’s profits.

For some analysis and critique of Morgenson and Story's work, hop over to Naked Capitalism for The NYT’s Latest Goldman/AIG Salvo: Missing the Real Targets?.

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If there are no reprisals, no punishments, no repurcussions and no stricter regulations, then only the filthy rich will be able to really compete safely in the world of "high finance"...

And the rest of us will be left to continually bleed money to keep them in business, until we have nothing left to bleed.

And the rest of us will be left to continually bleed money to keep them in business, until we have nothing left to bleed.

At which point, with nothing left to lose, the peasantry tends to rise up and heads start rolling. History 101 - which is why more or less intelligent societies have social safety nets.

It's fascinating that the rich always forget this lesson.

They don't bother to read history, as that's a record of "failures" (except those who succeed so wildly that they aren't worth ignoring), and they can't "remember" losing their own heads -- when the little spuds grow back, any new lessons learned previously went out with the old head.

you give them too much credit. I think too many of them simply don't care or won't care until the spigot of money to them is cut off. They have to feel the pain themselves.

Before they will ever feel it. Or so I've heard... :)

I love that graphic. It's brilliant.

I love that graphic too...

Hat tip to GreyHawk for sending me the link, image credit Plognark