Goldman Still Needs To Explain Its AIG Exposure

Folks at both the Fed and Goldman Sachs need to explain the discrepancy between the firm’s comments and the firm’s official level of AIG exposure. Over and over again, throughout this process, the bank has said its exposure to AIG was “hedged” or “immaterial”.

Here’s what they were saying last September, via Reuters (9/22/08):

Lucas van Praag, a Goldman spokesman, on Sunday said the Times article was wrong to suggest that Goldman had reason to be concerned about AIG’s problems.

“Although we have said many times on the record that our exposure to AIG was, and is, not material, the reporter chose to pursue a story line which suggests, by innuendo, that is not the case,” he said in an e-mailed statement.

“For the avoidance of doubt, our exposure to AIG is offset by collateral and hedges and is not material to Goldman Sachs in any way,” he continued. “The conclusions about our interests that readers of the New York Times article are invited to reach are seriously misleading.”

They made similar noises in just the last few weeks.

And now we learn officially last night that Goldman got almost $13 billion. We’ve discussed ways the bank may have had some exposure hedged, though in a way it doesn’t matter since it doesn’t take away from the fact that the bailout orchestrated by its former CEO had a major positive impact on the banks finances. $13 billion in payments is $13 billion, even if that risk had been hedged. Obviously Goldman had “interests.”

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