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View Diary: Open thread for night owls: Still too big to fail—and they know it (75 comments)

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  •  The AIG bailout was part of the Goldman Sachs ... (1+ / 0-)
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    JerryNA

    ... bailout, if I remember right.  AIG had insured a lot of mortgage-backed securities that Goldman Sachs had accumulated.  After the crash, when many of those mortgage-backed securities became worthless, AIG owed Goldman Sachs the face value of those securities.  AIG didn't have the reserves to pay.  Goldman Sachs' buddies in Washington had two alternatives.  They could bail out AIG or they could have a much bigger bailout for Goldman Sachs.  AIG is alive today because Goldman Sachs' buddies thought it would look better to bail out Goldman Sachs indirectly by way of AIG.  

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