"Some Goldman employees got rich before the markets collapsed, allowing them to invest several million dollars in the funds, often on a leveraged basis."

If I'm not mistaken, that was one of the problems with the 1929 crash -- everyone was buying on margin (i.e., borrowing money to invest in stocks which made the decline worse because of all the margin calls -- i.e., repay your loan, dammit -- that happens when you have to suddenly sell your shares).  So much for lessons learned on Wall Street.

A conservative is a man with two perfectly good legs who, however, has never learned how to walk forward. Franklin D. Roosevelt

Why are we paying bonus's to people who are either totally incompetent, in that they created an instrument they didn't really understand, which is why it got out of control and collapsed the whole house of cards. Well, then tell the bastards just how incompetent they are and say." if you think you can get anybody to hire you go for it, but if you can't be glad you still are employed."

OR, they KNEW and are just greedy criminals scamming the rest of us for short term profits and shouldn't be getting bonus's but indictments.

Back in September, they knew and they lied.

Financial Times  

AIG, Goldman and the NYT

Does anyone care to remember this story on AIG, from the New York Times, back in September? More to the point, does anyone remember the trouble it caused?

It was one of a series of articles that appeared in the mainstream press contemporaneous to AIG's bailout that dissected just what the insurer had been doing that made it so risky, and so systemically important.

We cite the NYT article in particular though, for this paragraph:

Although it was not widely known, Goldman, a Wall Street stalwart that had seemed immune to its rivals' woes, was A.I.G.'s largest trading partner, according to six people close to the insurer who requested anonymity because of confidentiality agreements. A collapse of the insurer threatened to leave a hole of as much as $20 billion in Goldman's side, several of these people said.

... which caused something of a furore.

Goldman strenuously and very publicly denied the gist of the allegation. So aggressive was their rebuttal, in fact, that the wires even wrote up seperate stories on it.

[.]
Now, of course, we have AIG's counterparty list. And guess who tops it?

Goldman Sachs.

Goldman is the proud recipient of $12.9bn in payments from AIG and AIGFP. (Specifically, $2.5bn from CDS collateral postings, $5.6bn from Maiden Lane III payments for CDS positions, and $4.8bn in payments related to securities lending. The Maiden Lane III portfolio was, of course, created in December specifically help reduce the burden of CDS collateral postings facing AIGFP proper - it bought the underlying CDO tranches from the CDS counterparties)

For the record then, it certainly was not the NYT that was "seriously misleading".

We wonder whether things might yet get uncomfortable for Goldman. After all, they're in rather an awkward position: on the one hand, according to their above PR line, they didn't need AIG's money at all (it was, to paraphrase, immaterial whether AIG went under or not). And yet, on the other hand Goldman is - gosh - the largest recipient, via AIG, of taxpayers' money.

[.]