So this morning James Gorman (Morgan Stanley’s CEO), Jamie Dimon (JPMorgan’s), and Brian Moynihan (Bank of America’s) all visited the offices of Davis Polk & Wardwell, the law firm that’s advising AIG on the huge share sale that’s coming.
Lloyd Blankfein didn’t. Someone else from Goldman pitched them, according to CNBC.
There could be a number of reasons for this. Maybe Goldman didn’t want to seem desperate. Maybe Goldman doesn’t want to underwrite one of the biggest share sales ever (up to $20 billion) and bring in an estimated $150 million for some reason.
Or maybe Blankfein knows it won’t get the deal because he remembers how 1) Goldman (arguably) might have helped AIG insure tons of risky mortgage investments.
In other words, this:
In Goldman’s biggest deal, it acted as a middleman between AIG and banks, taking on the risk of as much as $14 billion of mortgage-related investments. Then Goldman insured that risk with one trading partner—AIG, according to the Journal’s analysis and people familiar with the trades.
And 2) then some odd months later, Goldman asked AIG to pay it all of that insurance back — at top dollar.
Goldman was also a major counter-party to AIG’s disastrous credit default swaps. As a result, Goldman has been the biggest American beneficiary of the various government bailouts of the collapsed insurance giant (which itself is almost 80 per cent owned by the federal government).
Goldman got $4.8 billion $13 billion from AIG’s securities lending unit.
No one was holding a gun to AIG’s head, but still.
Goldman gracefully bowed out of the competition because it didn’t want to look bad again.