Documents Show Goldman Pressure on A.I.G.

By GRETCHEN MORGENSON and LOUISE STORY
NYT

Executives of Goldman Sachs and the American International Group, the Wall Street titans whose long alliance dissolved into a battle that shook the financial world, defended their actions on Wednesday before the federal commission investigating the financial crisis.

But perhaps more revealing than the executives’ explanations was the release of 500 pages of documents by the panel, the Financial Crisis Inquiry Commission, showing how Goldman’s aggressive and repeated demands for billions in cash from A.I.G. drove the insurer to the brink of failure in September 2008.

The documents also revealed for the first time the dollar amounts behind Goldman’s negative bet on A.I.G., which Goldman put in place to hedge its risk that A.I.G. might fail and not pay its obligations.

“Goldman was first going in the door asking for collateral. Goldman was by far the most aggressive in terms of the timing and amount asked for,” Phil Angelides, the chairman of the commission, said. “You were way ahead of everyone else in terms of the amount being demanded and the timing for that.”

(More here.)