Regulatory fail! NYT on how quite conflict between Goldman Sachs and A.I.G. pushed A.I.G. to the brink

I guess I had some inkling of this but as the NYT explains it it seems basically criminal.

They bet against the housing market, demanded tons of money from AIG (pre-bailout) which helped to further housing losses and increase their profits and then when the federal government does step in to bail out AIG, Goldman Sachs gets even more money???

What the fuck!!!

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…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…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…In its dispute with A.I.G., Goldman invariably argued that the securities in dispute were worth less than A.I.G. estimated — and in many cases, less than the prices at which other dealers valued the securities.

Read more (here)

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