Louise Story and Gretchen Morgenson had a lengthy new story up at the Times yesterday on how Goldman bled AIG to death. The piece details negotiations over payouts on swaps that Goldman had purchased from AIG. Details of the negotiations are interesting, but this paragraph jumped out at me:
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.
It seems that Goldman was even more of a beneficiary of the AIG bailout than we previously thought. Officially, it received more than any other counterparty, but add in the Société payments and headlines that referred to “AIG Trading Partners…” or “AIG Counterparties” would have to be revised to read “Goldman Sachs.”
This is outrageous. When was this arrangement made, and why? Did Goldman use SocGen to hide the extent to which it caused (and benefitted from) the AIG catastrophe? Would the size of its taxpayer-funded bonus pools be threatened by full disclosure of the payments? Like so many other aspects of Goldman’s business, this deserves an investigation.