Former AIG CEO Greenberg Fingers Goldman in the Insurer's Collapse
%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%%On Dec. 9, Greenburg accused Goldman Sachs (GS) of being a major catalyst in the collapse of AIG in an interview with The Wall Street Journal. He told the paper: "When the housing boom imploded, Goldman demanded giant cash collateral payments from AIG on a "mark to market" basis for housing-backed securities whose price was plummeting even if the underlying payment streams were intact."
Greenberg doesn't want to let the AIG bailout to stay as it is. He believes that if the press and Washington further investigate AIG's collapse they'll find a smoking gun in Goldman.
Greenberg's claims are startling. Golman Sachs has serious image problems and is disliked in Washington and by many taxpayers and investors in the company's stock who think too much of the firm's profits go to compensation. But that Goldman acted in bad fath or even illegally in its dealing with AIG is a novel claim and would be ignored if it came from someone lacking Greenberg's stature.
Will the government look further into the events surrounding AIG's collapse because of Greenberg's statements? Probably not. The reasons behind AIG's problems have been scrutinized very carefully. But it's still possible. Goldman had better hope that some enterprising congressperson doesn't want to drag the investment bank's management to Washington to be cross-examined in hearings. The firm's reputation is already about as low as it can get.