The NYT is reporting that A.I.G. has dismissed Goldman Sachs as an advisor:
“A.I.G., the insurance giant that planned to retain Goldman to help reorganize its businesses, has replaced Goldman as its main corporate adviser, according to three people with knowledge of the matter, which was not intended to be public. Instead, the insurer is turning to Citigroup and Bank of America.
The move is the first in what some analysts warn could be a series of defections among Goldman's clients after accusations "” vigorously denied by Goldman "” that it defrauded customers in a complex mortgage investment.”
I don’t buy into the Goldman defections — yet — due to the fraud allegations.
This smells like a little payback for Goldman’s role in the AIG collapse.
Don’t get me wrong, Goldie didn’t kill AIG, the insurer committed suicide. They were were reckless in their embrace of derivatives and had horrific risk management. As noted in Bailout Nation, the head of AIG FP, Tom Savage, actually said "The models suggested that the risk was so remote that the fees were almost free money. Just put it on your books and enjoy."
So I don’t want anyone to think I am blaming Goldie for AIG’s demise.
But they were the first vulture to arrive at the site of the wounded body, and they began tearing at AIG’s flesh before it was even carrion. Almost $20 billion in transfers took place from AIG to GS — BEFORE their collapse, BEFORE the bailouts. The rest of the taxpayer gift — at 100 cents on the dollar — was simply free money.
So, if you were in AIG’s shoes, and you had an opportunity to kick Goldie when they are stumbling around a bit — why wouldn’t you give them a swift knee to the groin?
Payback is a bitch . . .
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Source: A.I.G. Said to Dismiss Goldman LOUISE STORY and ERIC DASH NYT, May 6, 2010 http://www.nytimes.com/2010/05/07/business/07goldman.html
Me want clawbacks.
I don’t know. Looks like AIG is being led by a vigilante who needs to be hauled not only before CONgress but a grand jury.
http://money.cnn.com/galleries/2009/fortune/0912/gallery.dumbest_moments_2009.fortune/8.html
OK, so Goldman was like the crowd on the ground yelling “Jump”. Seems like a perfectly defensible position to me.
While payback may be a motive… it smells to me more of a government directive. Now that the Gov’t effectively runs or owns AIG, Citibank, and B of A…. the government losers want all their minions playing together in the sandbox.
@Barry – Payback? maybe…but what took so long?
@flipspiceland – Most everyone can agree that AIG should never have been bailed out. But since they were, they became owned by the gov’t – many of whom were more intested in making a point than actually running the company long enough to get some money back. Benmosche was brash enough to get some of them to figure that out.
GS, JPM, BAC, does it really matter?
@Conq
And how’s that working? Getting some money back from Goldamn Sucks who was the chief beneficiary-as a company–we’ll leave out individuals who were given the keys to the kingdom—of the “AIG” bailout?
Put it another way: If Goldamn was not a counterparty to AIG, would AIG have even been considered for a free ride?
It appears that when Goldamn is eliminated from the equations, with Hank Paulson in charge at the time, there would be no Goldamn bonuses, not penny one to discuss today.
@flip – How is *what* working? AIG is making slow and steady progress in paying off the government. Would they have been bailed out if GS wasn’t a counter-party? I have no idea – I’m no fan of GS, and very uncomfortable with their “personnel feeder” status into the Government — but I think it’s a reach to say that the whole AIG bailout was to protect Goldman.
I was mostly responding to your comments about Benmosche.
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