Was the AIG Bailout a Gift to Goldman Sachs?

[kpete]

Mar 13, 2009
Was the AIG Bailout a Gift to Goldman Sachs?

It's no secret that many of the top officials at the Federal Reserve and Treasury Department (including former Treasury Secretary Henry Paulson, Treasury Interim Assistant Secretary Neil Kashkari, Treasury Chief of Staff Mark Patterson, New York Fed President William Dudley, and New York Fed Chair Stephen Friedman) were once executives, directors, or lobbyists for Goldman Sachs. But have these officials been exploiting the bailout of AIG to steer billions of taxpayer dollars to their former employer, one of AIG's most prominent counterparties?

That's the question POGO raised in a letter we sent yesterday to Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner. We're concerned that the government's unprecedented effort to rescue AIG has been marred by a lack of disclosure and a troubling appearance of favoritism toward Goldman Sachs.

For months now, the press has been revealing that billions of taxpayer dollars passed through AIG and ended up in the hands of Goldman Sachs and other financial institutions that had purchased credit-default swaps from the insurance company. Just this week, The Wall Street Journal and Fortune obtained partial lists of AIG's counterparties, both of which suggest that Goldman Sachs has benefited enormously from the government's exceptional assistance.

In recent weeks, both Bernanke and Geithner have faced direct questions about AIG's counterparties from members of Congress such as Representatives Mike Castle (R-DE), Scott Garrett (R-NJ), and Carolyn Maloney (D-NY), and Senators Ron Wyden (D-OR) and Maria Cantwell (D-WA). But even Congress hasn't been able to get answers to the most basic questions about the AIG bailout. The Fed and Treasury often claim that disclosing more information would dissuade people from doing business with AIG and its counterparties, and would do great harm to the financial system as a whole. (The Fed has used a similar argument in refusing to comply with a FOIA request and lawsuit filed by Bloomberg News to get more details on the terms and recipients of some $1.9 trillion in emergency loans).

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-- Michael Smallberg
http://pogoblog.typepad.com/pogo/2009/03/was-the-aig-bailout-a-gift-to-goldman-sachs.html

[GoesTo11]

1. Well, duh.

I'm shocked, shocked that all the Goldman buddies are helping Goldman. That company should lose its corporate personhood.

[aquart]

2. Can we put Paulson in jail now?

I feel like a kid saying "Are we there yet?"

[MannyGoldstein]

3. Goldman Earned Every Penny

They worked hard to put people high up in government, and now they're harvesting the fruits of their labor.

All the Middle Classers should stop whining, and find their own government to buy.

[dkf]

6. Oh gosh. I'm sure that is what they are thinking.

Fruits of their labor indeed.

[Dr.Phool]

4. Yep.

Goldman and it's cronies have had their fingers in this crisis from the very beginning. I suspected it a while back, and recent revelations have confirmed my suspicions.

[INdemo]

5. Why can't the Federal government just conduct an audit?

??