Pretty much anytime we’ve discussed the Goldman Sachs (GS) earnings, it’s been followed with chants of “AIG AIG AIG.” People are convinced that the company is a total sham and that if it weren’t for the government’s bailout of AIG (AIG) counterparties, Goldman Sachs would have no clothes.
While it’s true that Goldman was a major AIG counterparty, it’s not clear that they did anything wrong or that yesterday’s earnings report was due to AIG.
Meanwhile, Goldman CFO David Viniar can’t figure out why there’s so much interest
Bloomberg: “They’re one of thousands and thousands and thousands of counterparties and the results of any trading with AIG are completely immaterial to what we do,” Viniar said today in an interview. “I am mystified by this fascination with AIG.”
Goldman Sachs, the most-profitable securities firm before converting to a bank last year, received more cash from AIG after the Federal Reserve rescued it last year than any other counterparty. The company has said it was insured against any losses from AIG and it didn’t benefit from the government’s rescue of the New York-based insurer. The Treasury Department’s chief watchdog for the financial rescue program is investigating whether AIG paid more than necessary to banks.
Viniar told analysts today that any profits related to AIG in the January-to-March quarter “rounded to zero,” as most of the transactions were unwound before the end of the year. In an interview, he also said profits in December weren’t significant.
“I would never tell you that we didn’t book any profit, I don’t even know,” he said. “I couldn’t tell you with any counterparty that we booked zero, but I could tell you it rounded to zero.”
That last point about December is important, since on the call Viniar only mentioned that there were no AIG profits booked in the first three months of the year, leading some to believe that he deliberately avoided mentioning December (the orphan month). Alas, that doesn’t seem to be the case.