There have been so many accusations thrown at Goldman Sachs recently — from the SEC, from shareholders, from Australians, from the Financial Crisis Inquiry Commission, from the SEC again now maybe — we had almost forgotten the granddaddy of Goldman Sachs Financial Crisis Conspiracy Theories, the old saw that former Treasury secretary Hank Paulson and the New York Federal Reserve agreed to pay out the counterparties to whom AIG sold credit default swaps at par specifically to benefit Goldman Sachs, which held billions of dollars of the swaps and allegedly had the most to lose, simply because onetime Goldman CEO Paulson couldn’t bear to see his old firm go down. Buried in today’s report from the Congressional Oversight Committee report on the AIG rescue, which contains the grim yet entirely unsurprising news that we will probably never be paid back for this thing, is a passage that grudgingly exonerates Goldman and its alumni of at least this one charge.
The rescue of AIG illustrates the tangled nature of relationships on Wall Street … Many of the regulators and government officials (in both Administrations) are former employees of the entities they oversee or that benefited from the rescue. These links have led to many allegations that the rescue was orchestrated in order to assist friends and former colleagues of those leading the rescue. Although Panel staff has spent significant time reviewing hundreds of thousands of pages of documents from the time of the rescue, to date they have found no evidence of any such concerted effort.
It may be small and vague — okay, so it wasn’t a “concerted” effort, maybe it was a slightly disorganized effort? — but nonetheless this is a victory, and Goldmanites ought not to look this gift horse from Elizabeth Warren in the mouth. Is Paulson in town? Perhaps he can pop over to the new HQ later today and celebrate the way they did back in the day, by clubbing some baby seals or lighting some Benjamins on fire.