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?.