Goldman Sachs rigging the game

Megan Carpentier has a useful summary of a NY Times article detailing how Goldman Sachs ripped off the U.S. taxpayer:

  1. The people at Goldman Sachs invested in mortgage-backed securities they expected to decline in value in order to make money off the insurance claims.
  2. Due to a long-standing relationship, they went to AIG for a kind of insurance — credit default swaps — which were not regulated.
  3. They then used other companies, including Société Générale, to purchase more of the unregulated insurance that AIG might not have otherwise underwritten in order to manage its own risk.
  4. When Goldman’s investments declined, they submitted insurance claims for the losses, but insisted on determining the amount of their damages on their own, without any input from AIG, any auditor or the market.
  5. After Goldman got as much money out of AIG as they thought they could, their stock analysts issued a report about how AIG was bleeding cash and their creditors wouldn’t negotiate, without mentioning that AIG was bleeding cash because of them and that Goldman was the creditor that wouldn’t negotiate. AIG’s stock tanked.
  6. The government stepped in, took an 80 percent share in AIG and then paid Goldman and the other creditors all the money they’d asked AIG for at the start of the negotiations in 2007, without using their power to force AIG’s creditors to negotiate.

That’s capitalism everybody. Wooooo!

P.S. Can someone remind me why none of these guys are in jail? Is it because they’ve bought and paid for the Democrat-run government?

One Comment

  1. Ian

    Its trickling down into the large, open, and empty pockets of the masses! Hurray capitalism!