It goes all the way back before AIG received its first "loan". The weekend meeting between AIG, Treasury and Goldman Sachs. It was known at the time Goldman had approximately $20B exposure to AIG. We also know that Goldman received $10 billion in TARP funds, which it says it would like to return. Goldman has also admitted to having a hedged position against the AIG exposure. My guess? They were shorting AIG common and every other instrument to cover a good portion of the exposure in case they were not made whole. In the end they were made whole by the taxpayer giving Goldman $18b by way of AIG I'm guessing Goldman also scored on the hedged side of this position as well. No need to keep the TARP money now.
Actually, Goldman's ability to be profitable goes back before this. They navigated the financial tsunami by short selling derivatives starting in 2007 around the same time Larry Blankfein sold an assload of his holdings. So in a round about way Goldman continued to fuel the speculative credit market by short selling securitized debt to anyone who would buy it, usually the people in the offices next to them. Goldman knew the party was over then. Savvy? Yes. Ethical? No. Fraudulent? Yes. Now how much money did Goldman make with the $10B TARP funds that was probably levered up to 100M on short sales, perhaps even shorting other banks?!?!
All of the uproar over the $130M in AIG bonuses is a diversionary tactic away from the $160B in taxpayer "loans" that is being used to make other banks whole. This is ANOTHER backdoor bailout of these banks and NOT AIG. Some of these banks are not even in the United States. You tell me how we are going to recoup these loans?
Hell, I think those guys deserve $130M in bonuses for this if nothing else. This was a job well done; the greatest heist ever. But then again, I would not be surprised in the least if this bonus story was planned. I'm pretty sure none of them actually thought this would fly; contractually or not.
These guys are not clueless like they seem to be. It takes genius to orchestrate fraud of biblical proportions. Remember this one?
As head of the New York Fed, Geithner has served as the central bank’s top liaison with Wall Street. Geithner oversaw meetings at his bank to attempt to head off Lehman’s failure in September, later hosting gatherings on how to resolve AIG.
