Paulson Invites Goldman CEO to AIG Bailout Talks

Newt Gingrich appeared on Greta Van Susteren last night, and he and Greta were both hopping mad about Goldman Sachs CEO Lloyd Blankfein being the only Wall Street executive allowed to attend the Federal Reserves AIG bailout talks.  Two things make this very improper.  First, Treasury Secretary Henry Paulson is the former CEO of Goldman Sachs.  Second, Goldman was one of AIG’s biggest trading partners, and stood to lose $20 billion if the firm was not rescued.  Greta and Newt referenced an article, and this is what I found:

From The New York Times:

As the group, led by Treasury Secretary Henry M. Paulson Jr., pondered the collapse of one of America’s oldest investment banks, Lehman Brothers, a more dangerous threat emerged: American International Group, the world’s largest insurer, was teetering. A.I.G. needed billions of dollars to right itself and had suddenly begged for help.

One of the Wall Street chief executives participating in the meeting was Lloyd C. Blankfein of Goldman Sachs, Mr. Paulson’s former firm. Mr. Blankfein had particular reason for concern.

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.

Later in the article, a Goldman Sachs spokesperson tries to defend Blankfein’s presence at the meeting:

A Goldman spokesman said in an interview that the firm was never imperiled by A.I.G.’s troubles and that Mr. Blankfein participated in the Fed discussions to safeguard the entire financial system, not his firm’s own interests.

You can read the whole article here.

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