Is it an end to one Goldman Sachs conspiracy theory? Some have suggested the reason government officials bailed out AIG (NYSE: AIG) was to help exposed investment banks, notably Goldman Sachs (NYSE: GS).
Goldman has always maintained that it was fully hedged and had nothing to gain by the government bailout of AIG. But it never really proved its point with back-up documentation, leading many, including Elizabeth Warren, to remain suspicious. But the recent data dump from the Senate Finance Committee shows that the bank did indeed have a lot of hedges in place. In fact, on paper it was basically flat.
But some of those hedges, as we've noted, were with Lehman Brothers (Lehman Brothers news) and Citigroup (NYSE: C), which might not have been able to pay off. So Goldman Sachs wasn't flat in reality.
The New York Times drives home another point, which is that regulators at the time thought the bank was fully hedged. Several emails included in the data dump from Treasury officials make that point clear. One said the bank's "net exposure is $2.3 billion," but added, "they have credit hedges of $2.5 billion, $500 million of which is internal, so they are roughly flat."
For more:
- here's the article
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