Reply #38: Fed loans to AIG make Paulson's previous employer -- Goldman Sachs -- rich

[Octafish]

Not to beat on a horse beaten down by a market decision, but...

Fed loans to AIG make Paulson's previous employer rich

Bloomberg / New York September 30, 2008, 0:44 IST

As much as $37 billion from federal bailout loans to American International Group Inc has gone to investment banks including Goldman Sachs Group Inc, the firm Treasury Secretary Henry Paulson used to run.

Without the government money, Goldman, Merrill Lynch & Co, Morgan Stanley, Deutsche Bank AG and other firms could have become some of the biggest creditors in a bankruptcy filing by AIG, the world’s largest insurer, because of its billions in losses on sub-prime bonds and corporate debt.

“It was the biggest crisis ever — if you’re an investment bank,” said Joshua Rosner, a managing director at investment research firm Graham Fisher & Co in New York. “We didn’t just save AIG. We saved the counterparties, the banks. It’s true that it would have been a disaster, but it would have been a disaster for them.”

The firms received cash as AIG borrowed from a Federal Reserve credit line endorsed by Paulson, Goldman’s former chief executive. The insurer had borrowed $44.6 billion from the credit line as of September 25, the Federal Reserve reported that day.

Paulson’s successor at Goldman, Lloyd Blankfein, was the only chief executive at a meeting September 15 at the New York Federal Reserve Bank at which the troubles at AIG were discussed, although representatives of other firms were present, a Fed spokesman said.

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http://www.business-standard.com/india/storypage.php?autono=335924

Thank you, my Friend! Really appreciate that you know what's what and who's who.