Testy Conflict With Goldman Helped Push A.I.G. to Edge

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Billions of dollars were at stake when 21 executives of Goldman Sachs and the American International Group convened a conference call on Jan. 28, 2008, to try to resolve a rancorous dispute that had been escalating for months.

A.I.G. had long insured complex mortgage securities owned by Goldman and other firms against possible defaults. With the housing crisis deepening, A.I.G., once the world’s biggest insurer, had already paid Goldman $2 billion to cover losses the bank said it might suffer.

A.I.G. executives wanted some of its money back, insisting that Goldman — like a homeowner overestimating the damages in a storm to get a bigger insurance payment — had inflated the potential losses. Goldman countered that it was owed even more, while also resisting consulting with third parties to help estimate a value for the securities.

After more than an hour of debate, the two sides on the call signed off with nothing settled, according to internal A.I.G. documents and an audio recording reviewed by The New York Times.

Behind-the-scenes disputes over huge sums are common in banking, but the standoff between A.I.G. and Goldman would become one of the most momentous in Wall Street history. Well before the federal government bailed out A.I.G. in September 2008, Goldman’s demands for billions of dollars from the insurer helped put it in a precarious financial position by bleeding much-needed cash. That ultimately provoked the government to step in.

With taxpayer assistance to A.I.G. currently totaling $180 billion, regulatory and Congressional scrutiny of Goldman’s role in the insurer’s downfall is increasing. The Securities and Exchange Commission is examining the payment demands that a number of firms — most prominently Goldman — made during 2007 and 2008 as the mortgage market imploded.

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much more at link: http://www.nytimes.com/2010/02/07/business/07goldman.html?th=&emc=th&pagewanted=print

Goldman Sachs as a corporate motto. That motto is, "the one with the most toys wins!" Considering Goldman Sachs has been around for more than a 100 years and has more than one international economic downfall in it's resume, it is time this pig of a company is dismantled and all of the people in-charge are sent to jail conspiracy, fraud, infringement of national security, etc... This group of corporate clowns broke the economy deserve the best our penitentiary system has to offer, down with Goldman Sachs, up with the common man.

:evilgrin:

;)

:kick:

Do we not have a right to know where our money went??

:kick:

using the moral hazard excuse. Putting a huge amount of pressure on AIG and the entire financial system.

Goldman certainly made out ok, right. They are borrowing billions of our dollars at a near zero interest rate and investing (risking, gambling) it. It is outright theft of our tax dollars. If their bets lose, they lose nothing, only the American people lose. Quite a gig they got going there, huh?

On the crisis.

Don't you realize the sleepless nights the poor Hankie boy has had, wondering if his bets for AIG-Goldman Sachs and against Lehman would be overlooked?

Lucky for him, this is an era wherein NO CONFLICT of interest gains too much attention from our lawmakers -as they are all in the game together.

Di Feinstein went so far as to have the Senate ethics rules re-written. Thus, according to the new frame offered the lawmakers - as long as any legitimate reason exists to vote for a piece of legislation, other than the money coming to your family from your vote, all is well.

Thus she could vote for the Iraqi War Resolution, and let her husband set up 27 million bucks in deals from government contracts involved with our War Effort, and not worry that she was going to hear about a conflict of interest.

She also appointed as the Oversight of Ethics Lead Guy a person who always does her biding.

We really need to get rid of everyone in office, save a very small group.